Pan African Venture Capital Fund Start Africa Ventures today announced the closure of its $36.3 million fund, which it has primarily used to invest in B2B and B2B2C startups across Africa.
In an interview with todaybusinessupdates.com, managing partner Zechariah George said Launch Africa has supported 108 startups in 21 African countries. They include Nigerian neobank Kuda, Kenyan B2B e-commerce retail platform MarketForce, and Tunisian edtech startup GOMYCODE, among others.
While these startups have reached the growth stages, the Mauritius-based company has invested in them earlier in their journey. It typically supports seed and pre-Series A startups and cuts an average check between $250,000 and $300,000. Some startups in these phases include Sudanese fintech Bloom, Bostwana-based insurtech Alpha Direct, and South African big data platform Carscan.
George says the company, which is considered the most active early-stage VC on the continent, will continue to expand its geographic footprint and backup startups in other countries. “I can’t think of any fund that covers as many markets as we do,” said the managing partner. “We are doing deals in DRC, Madagascar, Sudan, Botswana, Benin, Togo. People use the word pan-African loosely, but when we say pan-African, we really mean what we’re doing.”
George also launched Fund 1 of the company Janade du Plessis at the peak of the pandemic in July 2020. The fund reached its first close in September 2020 and a final close in March 2022.
Both partners had vast financial and investment experience before starting Launch Africa. An angel investor, George worked as a bulging investment banker on Wall Street before co-founding two well-known accelerator programs in Africa: Barclays Rise Growth Accelerator and Startupbootcamp Afritech. On the other hand, Du Plessis held the position of ex-chief investment officer at the African Development Bank and founded Abrazo Capital, a social impact driven investment company.
Launch Africa, which has more than 238 retail and institutional investors from 40 countries according to its statement, has invested more than $24 million in its portfolio companies. Most of these investments are one-off checks as the early stage VC rarely takes on subsequent rounds.
“In fund one, we have limited capacity for follow-up. If we set aside a significant portion of our fund for follow-ons, like many other funds, we wouldn’t be able to cover the entire continent and multiple regions and products,” said George. “All of our portfolio companies that need significant capital in the next round of funding, we are offering our LPs the opportunity to support them.”
Launch Africa says it helps LPs with due diligence and waivers fees when they invest alongside the fund’s lead checks. These LPs have staked more than $14 million in Launch Africa portfolio companies.
“The Launch Africa team is working with founders and expert advisors to accelerate exit opportunities for investors.” said du Plessis in a statement. “Providing our exit strategy in these challenging times inspires investor confidence and brings significant benefits to the African tech ecosystem.”
Some of Launch Africa’s LPs are focused on German fintech CommerzVentures† The company’s managing partner, Patrick Meisberger, said his company was “happy to partner with Launch Africa Ventures to invest in some of the most exciting fintech investment opportunities in Africa.” Fintech is a major contributor to Launch Africa’s portfolio; more than 38% of companies come from that segment. The rest includes e-commerce and marketplaces (16%), healthtech (13%), logistics and mobility (12%), data analytics/AI (11%) and edtech (7%).
Venture capital firms like Launch Africa sometimes come under heavy fire for supporting too many companies in a short period of time. Still, George sees the company’s strategy as necessary given the stage that Launch Africa is in and the broader early venture capital market in Africa.
“There is very little strategic, non-financial value between pre-Series A investments on the continent. Most of the money that comes in the early stages comes from angels, friends and family and accelerators, and very regional venture capital firms. There’s nothing wrong with that. I mean, it’s the backbone of any mature industry,” he said. “But it’s very important to have a plan to scale to multiple regions and product verticals, and you can’t do that by playing low.”
George argues that the ability to invest significant capital early and founder-friendly terms with a lot of non-financial added value accelerates a company’s growth from what would normally take three to four years to just 12 to 18 months. “That’s the advantage of positioning ourselves as specialists in early stage investing,” George said.
Launch Africa has no intention of slowing the pace despite the bleak VC landscape; the company could double down on some of its portfolio companies at better discounts. Like a few local investors who spoke to todaybusinessupdates.com recently, Launch Africa said it would provide follow-up capital – through bridging and expansion rounds – especially to those going through a cash shortage.
“We work hand-in-hand with each portfolio company to preserve capital and generate revenue for their unique business challenges,” said Margaret O’Connor, the company’s chairman at todaybusinessupdates.com. “We’re trying to help founders understand how to navigate challenging macroeconomics and focus on how to make more money faster so they keep growing.” O’Connor has experience as an entrepreneur, MasterCard executive and government advisor in the US, UK, Asia and Europe in her wealth management portfolio.
That said, Launch Africa isn’t just interested in keeping the name of Africa’s most active early-stage fund. It also wants to build a reputation by taking diversity and inclusion into account. The company claims these themes are “central to its investment ethos,” as evidenced by two stats: 91% of the founders in its portfolio are African, while 20% are women.