Lagos-based Ventures Platform, one of Africa’s most active early-stage investors, has raised sixty-four million dollars for its second fund and is targeting a final close of seventy-five million dollars. Among the investors is the Nigerian government, which is participating through its Investment in Digital and Creative Enterprises program. This marks the first time the Nigerian government has invested in a venture capital fund. This is significant because 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, Proparco, Standard Bank, MSMEDA, and AfricaGrow. The fund also attracted European family offices such as Alder Tree Investment and prominent global backers like former Y Combinator CEO Michael Seibel. The firm says seventy percent of the investors from its previous fund returned.
Nigeria choosing this firm for its 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. The firm launched its first institutional fund, a forty-six million dollar 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. 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 ninety startups across the continent. The firm says most of these investments are in painkiller businesses across fintech, healthtech, agritech, edtech, and artificial intelligence. These are companies that solve for non-consumption, serving markets where people have little to no access to a service.
The firm points to portfolio companies like the Visa-backed unicorn Moniepoint and the Stripe-owned Paystack, two fintechs that unlocked new markets for online payments and small business banking. Many small businesses could not sell beyond their immediate vicinity before Paystack because they could not accept online payments. Moniepoint, on the other hand, has driven financial inclusion to the nooks and crannies of the country. That is what the firm calls market creating innovation.
Other notable portfolio companies include the Left Lane-backed remittance app LemFi, the Gates Foundation-backed SeamlessHR, the Norfund-backed OmniRetail, the QED-backed fintech Raenest, and the healthtech company Remedial Health.
Even as innovation accelerates and funding in Africa’s tech ecosystem has surpassed ten billion dollars 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 venture capital firms, most of them emerging managers who have faced a tough climate globally over the past two years.
Ventures Platform, however, managed to attract both local and international limited partners for a second fund despite the market uncertainty. The firm has limited partners who understand how venture ecosystems in other markets have developed and know the African market will get there in the long term. Another reason is that the firm has recycled capital from its prior syndicates, returning four out of its six vintages 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 lingering questions around exits as well as the continent’s funding slowdown, from five billion dollars in 2021 to two billion dollars last year, the firm adds that Africa’s long-term potential has not waned. It describes the continent as the purest asymmetric play for non-consensus alpha, which is venture-speak for high-risk, high-upside bets. If you are a global capital allocator looking for true diversification, Africa is the place. By 2050, one in four humans will be African. The GDP growth rate is double that of the United States, and yet most of the value is still offline. The opportunity is huge if you have the patience and the local context.