Pan-African contrarian investor P1 Ventures hits first close of $25 million for its second fund

by MMC
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Pan-African Venture Capital Corporation P1 companies reached the first close of its second fund at $25 million. The venture capital firm has secured this capital from some of Africa’s largest industrial conglomerates and private companies, several funds of funds and general partners of global funds based in the United States and Europe.

P1 Ventures hopes to complete its closing by early next year, founder and general partner Mikael Hajjar told TechCrunch in an interview.

Hajjar launched P1 Ventures in 2020 with Hisham Halbouny, who also serves as general partner. Its first fund (a proof-of-concept fund, as Hajjar calls it) allocated $11 million to 24 companies, focusing primarily on the e-commerce, fintech, insurance, tech and tech sectors. health and SaaS.

Although this second fund (its first institutional fund) will still focus on these sectors, the company is adding AI to the mix. Its first investment in this category is Zambian startup Nkoloso.ai, which collects data and tracks large swathes of agricultural land using satellite imagery and AI. It is also one of two AI startups and five portfolio companies that the Dubai-based venture capital firm has backed through its second fund.

Hajjar says the company’s use of AI in the agriculture and fast-moving consumer goods (FMCG) sectors illustrates Africa’s potential to leverage this emerging technology to bypass traditional infrastructure, in the same way that mobile money in Africa has overtaken the need for debit and credit card infrared. Additionally, AI shows how African companies can develop products with global reach.

“We believe that AI will be the next big opportunity for Africa. So when we think about how fintech has transformed the continent and allowed it to disrupt the banking industry, we believe AI will do the same with sectors like retail, healthcare and creative economy,” said the general partner.

“The beautiful thing we see in AI is the ability to export. As you know, the single market and currency risk are the main risks associated with investments in Africa. The beauty of AI is that you have export-focused businesses. Hajjar cited Egyptian-born Instabug and BioNTech subsidiary InstaDeep as examples of software and AI companies founded in Africa with clients in the US, Europe and around the world.

P1 Ventures, which has offices in Lagos and Cairo, recently launched an Entrepreneur In Residence program, under which Nkoloso.ai received funding. The two partners use their skills and expertise as former operators to run this venture capital studio, which plans to incubate four additional startups over the next four years, led by founders capable of scaling the product to the market and develop the product.

During the interview, Hajjar proudly highlights his company’s “contrarian” approach to venture capital investing in Africa. “We think outside the box and support the underdogs; we invest where no one else does,” he says, highlighting early investments made by P1 Ventures’ first fund in startups operating in French-speaking African markets, including Yassira mobility startup that became a super application in Algeria; Chari, a B2B e-commerce platform in Morocco; And Djamo, a payment startup in Ivory Coast. These newcomers have become the best-funded startups in their respective countries. Yassir, the company’s first investment, notably stands out as one of the most valuable startups in Africa and the Middle East.

P1 companies

P1 companies

From left to right: Hisham Halbouny and Mikael Hajjar. Image credits: P1 companies

Although most of P1 Ventures’ investments from its initial fund have been made at the seed stage, the company is characterized as multi-stage and occasionally engages in Series A and B investments opportunistically. It is evident that P1 Ventures likely provided small checks during the later stages of its expansion to companies such as Yassir and Egyptian fintech MoneyFellows, due to the limited size of its early capital. Nevertheless, it is curious that the company was able to participate in these financing rounds. Hajjar explained that the institutional background of the partners plays an important role. He also noted specific cases where tiered and geographical arbitrage was crucial and highlighted their active involvement in assisting companies with investors for subsequent funding rounds, talent and expansion strategy.

“Very few African GPs manage funds with such institutional history, allowing us to have greater visibility into what it takes to build category-defining businesses, particularly when we look at inflection points and arbitrages across stages and geographies,” the general partner said. , referring to how P1 Ventures chose Chari at the pre-seed stage over the more popular B2B e-commerce offerings in Egypt and Nigeria and MoneyFellows in Series A instead of other fintechs at the pre-seed stage /boot at comparable prices in Egypt.

In addition to this, P1 Ventures was also instrumental in connecting MoneyFellows with CommerzVentures for its Series B round and with Chari in several acquisitions made over the past two years, Hajjar noted.

game ballan Egyptian software company that gamifies customer loyalty and retention with a customer base in 70 countries, and a healthcare technology company backed by General Atlantic. Trusted Health are among P1 Ventures’ 29 early-stage investments in 10 countries since its launch.

P1 Ventures observed that, on average, its portfolio businesses secured 35 times more follow-on money for every dollar invested, even in the face of a decline in global venture capital funding. The company, which has not disclosed its IRR, says the metric arises from the significant value it brings to its portfolio of businesses beyond capital. This value is primarily attributed to the partners’ multi-stage, multi-sector expertise and their extensive networks across the United States, Europe and Asia.

“I am the first Mauritanian to launch a fund; As you can appreciate, this comes with deep meaning. I know that African talent is more dispersed than current venture capital. I intend to be that change agent and empower the next generation of African entrepreneurs. Just like people took a chance on me as an emerging fund manager, it is now my duty to support overlooked founders and turn them into regional or even global winners,” said Hajjar.

“Moreover, we believe that what Africa is currently experiencing is very similar to what Europe experienced 25 years ago or what Latin America experienced eight years ago. We believe P1 is best positioned to emerge as a first VC, just as Index Ventures did in Europe or Kaszek in Latin America. »

Before venturing into angel investing in 2014 and establishing P1 Ventures in 2021, Halbouny previously held an associate position at Man Capital, a subsidiary of the Mansour Group. Man Capital had invested early on in high-profile companies such as Uber, Airbnb and Bolt. He was also the Managing Director of EFG Hermes, one of the largest investment banks in the MENA region. On the other hand, Hajjar, an MBA graduate and engineer from Stanford, has held positions at Google, Zum and Areva.

Alongside partners, P1’s advisory group is also made up of investors and operators, including Emil Michael, former Uber commercial director, and Bernard Dalle, afmember of the management team from Index Ventures, based in London. “Innovation is booming on the African continent and P1 is ideally placed to help early-stage African entrepreneurs build valuable and sustainable businesses,” Dalle noted.

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