The opportunities that exist in Africa are quite endless and this is widespread knowledge. The endless possibilities that exist within the continent have helped raise the interest of foreign investors and foreign venture capital firms. It is, however, really good to know that indigenous venture capital firms and funds targeted at startups within the continent are stepping up to the challenge.
Launch Africa Ventures, a pan-African venture capital fund has raised $36.3 million in funding which it plans to invest in B2B and B2B2C startups across the continent.
Launch Africa Ventures has backed over 100 startups across 21 countries in Africa, according to managing partner Zachariah George. The venture fund has backed startups across different businesses and operations including edtech GOMYCODE which recently raised $8 million in Series A funding, digital bank Kuda, Kenyan B2B e-commerce retail platform MarketForce, Sudanese fintech Bloom, Bostwana-based insurtech Alpha Direct, South African big data platform Carscan, etc. Many of these startups have grown from early stages to their growth stage.
Typically, Launch African Ventures backs startups in their seed and pre-Series A rounds and provides investment within the range of $250,000 to $300,000. The VC has big and big plans. Considered one of the most active in the continent, the VC plans on expanding into more locations and markets in Africa. “I can’t think of a single fund that covers many markets as we do. We’re doing deals in the DRC, Madagascar, Sudan, Botswana, Benin, and Togo. People use the word pan-African loosely, but when we say pan-African, we truly mean what we do,” managing partner Zachariah George said.
The VC’s Fund 1 was launched in July 2020 while the pandemic was still raging on, by managing partners Zachariah George and Janade du Plessis. In September of that same year, it had its first close and by March 2022, its final close. Both partners have notable experience in finance and investment before they started Launch Africa.
The VC has invested more than $24 million in its portfolio companies. Its investments are usually a one-time thing as it hardly partakes in subsequent rounds.
“In fund one, we have limited capacity for follow-ons. If we were to reserve a significant portion of our fund for follow-ons like many other funds do, we wouldn’t be able to cover the whole continent and multiple regions and products. Any of our portfolio companies that need significant capital at the next round of funding, we provide an opportunity for our LPs to back them,” managing partner Zachariah George explained.
“The Launch Africa team works with founders and expert advisors to fast-track exit opportunities for investors. Providing our exit strategy during these challenging times instills investor confidence and brings significant benefits to the African tech ecosystem,” managing partner Janade du Plessis wrote in a statement.
While the VC has backed startups across various industries, fintech has the biggest share with over 38 percent, and edtech is its smallest with just 7 percent. The VC has received criticism for backing too many companies for short periods but managing partner Zachariah George sees this as a strategy. “There’s very little strategic non-financial value among pre-Series A investment on the continent. Most of the money that comes at the early stages are from angels, friends and family and accelerators, and very regional VC firms. There’s nothing wrong with that. I mean, it’s the backbone of any mature industry. But it’s very important to have a plan to scale into multiple geographies and product verticals, and you can’t do that by playing low,” he said. He sees Launch Africa as specialists for early-stages funding.