African startups have given VC another $ 100 million following the recent Novastar Ventures increase.
The Nairobi and Lagos-based investment group announced that it has made new commitments of $ 108 million to launch its Africa Fund II, bringing Novastar's total capital to $ 200 million.
With additional resources, the company plans 12 to 14 investments across the continent, according to managing director Steve Beck. He spoke to theinformationsuperhighway about Novastar Ventures' plans for the new fund.
A notable update to Novastar's VC focus is its geographic scope. The company was originally co-founded in Kenya by Beck and the British investor Andrew Carruthers and built his first portfolio mainly on companies based in East Africa. Novastar Ventures' first fund made 15 investments, including companies such as Uganda and Kenya, which focus on energy startup SolarNow and agtech company M-Farm.
"The second fund is basically the same strategy as the first, but … the biggest difference is that we have opened a second front in West Africa – especially to be in and around the Lagos entrepreneurial system," said Beck called theinformationsuperhighway.
Before closing Africa Fund II, Novastar Ventures had already made several investments in West Africa, including a tour of the Nigerian on-demand motorcycle transit startup Max.ng and support from the Ghanaian health care company MPharma. Novastar opened an office in Lagos in 2019.
According to co-founder Steve Beck, the focus of the startups that Novastar will target with its new fund is more on mission than on industrial silos. "We are industry-independent. I would call myself a segment fund rather than a sector fund," he said.
"We are really trying to find companies that are called breakthrough companies that are addressing the biggest problems in the largest markets."
This has prompted Novastar Ventures to invest in digital businesses in education, information access, agtech, mobility and off-grid energy.
"Essentially, we're looking for companies that can meet basic needs, assets, and services in the true mass markets of the continent," said Beck.
When asked whether the company is a dedicated impact fund, Beck said: "We characterize ourselves as a commercial risk fund with an impact screen."
In terms of investment amounts and types, Novastar Ventures is fairly flexible in terms of ticket size, from seed capital to the later stage.
"We will … have some portfolio companies where we invest $ 1 million or less, or some where we invest $ 8 or 9 million through capital rounds." That's … the deployment strategy, ”said Beck.
According to its co-founder, Novastar Ventures works closely with its portfolio companies.
“We are very active investors and always have a seat on the board to be close to the entrepreneurs. We are often the first institutional investor you have. "
Startups interested in the company can contact the founders and directors of the fund via the website or LinkedIn, according to Beck. He added that Novastar is recruiting to add another member to its investor team in 2020.
The recent capital raising and $ 200 million capital creation create another high-quality fund that focuses on African startups.
The continent's tech ecosystem was estimated to be $ 2 billion in 2019 startups, compared to less than half a billion dollars five years ago.
Other major VC shops focusing on Africa include TLcom Capital, which closed a $ 71 million fund in February, and Partech, which doubled its Africa fund to $ 143 million in 2019. including those from Goldman Sachs and Visa.