TLcom Capital, a venture capital firm focused on investing in African startups is raising $150 million for its second fund aimed at investing in early and late-stage investments.
According to a statement, the firm has reached a first close of $70 million, almost what it raised in its first fund called TIDE Africa Fund which achieved its first close in 2017 and its final close in 2020. Managing partner Maurizio Caio mentioned that TLcom Capital expects to reach a second close later this year.
When TLcom Capital closes the fundraising, it will be the largest for the firm which has assets under management (AUM) worth $350 million across Africa and Europe. It will also make the firm one of the biggest independent venture capital firms focused on Africa.
TLcom Capital had its first fund called the TIDE Africa Fund in 2020 and announced that it was going to invest in 12 African startups from Seed to Series B rounds after closing the fund at $71 million. The venture capital firm eventually ended up investing in only 11 startups across Africa namely Andela, Ajua, Autochek, Ilara Health, Kobo360, Okra, Pula, Shara, Terragon Group, Twiga and uLesson. According to managing partner Maurizio Caio, “The exact reason why we stopped investing is that we were trying to understand how much capital we needed to support these companies going forward in full-on rounds. So, we decided that we didn’t want to invest in another company, just because we wanted to reach a dozen companies without having enough capital for follow-on rounds”.
The second fund being raised by TLcom Capital is being targeted at investing in 20 African startups with a ticket size that’ll range from $500,000 to $15 million. The company will also be investing in startups outside of Nigeria and Kenya where its current portfolio companies are based. TLcom Capital is looking at expanding focus to Egypt and making more investments across East and West Africa.
TLcom Capital has few limited partnerships like other pan-African funds. Its local LPs include Sango Capital and FBN Quest. The rest which are foreign LPs include AfricaGrow (a joint venture between Allianz and DEG Impact), Bertelsmann, King Philanthropies, CDC Group, IFC, Proparco and Swedfund.
“In this first set of investors, we have two African LPs that are coming back with more capital than the previous time. But there’s still work to be done to attract more African investors. Then again, the important thing is that the capital market is learning that Africa venture capital is an attractive space. And the fact that more private investors realize that, without having any institutional constraint to devote resources to Africa, is very encouraging”, Maurizio Caio said.
“The big picture is that we are still very early in African VC despite raising almost $5 billion. This is the message to the entrepreneurs: Think big, don’t try to second-guess, focus on the magnitude of the opportunity, because if it’s compelling, you will find capital to support it. Don’t worry about dilution; worry about how much money you need to build a very large company in a large market. Let’s take advantage collectively of more capital coming into the space”, he added.
TLcom Capital focuses on sectors including fintech, mobility, agriculture, e-commerce and education but through its second fund, the company is willing to try out new sectors like crypto, DeFi and web3.