Lagos-based Ventures Platform, one of Africa’s most active early-stage investors, has raised $64 million so far for its second fund, targeting a final close of $75 million, founding partner Kola Aina tells TechCrunch.
Among the investors is the Nigerian government, through its Investment in Digital and Creative Enterprises (iDICE) program, which marks the first time this government has invested in a VC fund. That’s significant, since Nigeria’s burgeoning startup community is home to the largest number of startup unicorns on the continent.
Other limited partners in Ventures Platform’s second fund include IFC, British International Investment (BII), Proparco, Standard Bank, MSMEDA, and AfricaGrow, along with European family offices such as Alder Tree Investment and prominent global backers like former Y Combinator CEO Michael Seibel. Aina says 70% of the investors from its previous fund returned.
Nigeria choosing this firm for a debut investment is perhaps not surprising. Since its founding in 2016, Ventures Platform has built a reputation for spotting breakout startups in the country early, something it hopes to replicate in other African markets.
Ventures Platform launched its first institutional fund, a $46 million vehicle, in 2022 to focus primarily on pre-seed and seed rounds.
With the second fund, the firm will also pursue Series A investing, while “investing with more conviction” and seeking larger ownership stakes, Aina said. This should be good news for the region’s founders, as Series A funding has become harder to obtain after years of pullback from Silicon Valley firms.
While Ventures Platform plans to deepen its presence in Nigeria, the firm has begun establishing a presence in Francophone West Africa and North Africa, regions where it has already made a few investments, to gain earlier access to promising deals.
So far, the Pan-African venture capital firm has funded over 90 startups across the continent. Most of these investments, the firm says, are “painkiller” businesses across fintech, health tech, agtech, edtech, and AI — companies that solve for non-consumption, or in simpler terms, serve markets where people have little to no access to a service.
Aina points to portfolio companies Visa-backed unicorn Moniepoint and Stripe-owned Paystack, two fintechs that unlocked new markets for online payments and small business banking.
“Many small businesses couldn’t sell beyond their immediate vicinity before Paystack because they couldn’t accept online payments,” he said. “Moniepoint, on the other hand, has driven financial inclusion to the nooks and crannies of this country. That’s market creating innovation.”
Other notable portfolio companies include Left Lane-backed remittance app LemFi, Gates Foundation-backed SeamlessHR, Norfund-backed OmniRetail, QED-backed fintech Raenest, and health tech Remedial Health.
Even as innovation accelerates and funding in Africa’s tech ecosystem has surpassed $12 billion since 2015, stakeholders are voicing fresh concerns about the shortage of exits and liquidity events. That reality has made fundraising harder for many of the continent’s VCs, most of them emerging managers who, as a collective globally, have faced a tough climate over the past two years.
Ventures Platform, however, in that time, managed to attract both local and international LPs for two funds despite the market uncertainty.
“We have LPs who understand how venture ecosystems in other markets have developed and know we’ll get there in the long term. Another reason is that we’ve recycled capital from our prior syndicates,” Aina said, referring to the firm returning four out of its six vintages (including five angel syndicates) between 2016 and 2022. The investor also claims that the first fund ranks among the top performers globally based on TVPI and IRR for its vintage year.
Still addressing questions around exits as well as the continent’s funding slowdown (from $5 billion in 2021 to $2 billion last year), Aina adds that Africa’s long-term potential hasn’t waned and describes the continent as the “purest asymmetric play for non-consensus alpha” — venture-speak for high-risk, high-upside bets.
“If you’re a global capital allocator looking for true diversification, Africa is the place,” he said. “By 2050, one in four humans will be African. Our GDP growth rate is double that of the U.S., and yet most of the value is still offline. The opportunity is huge if you have the patience and the local context.”