Image credits: Business Platform
Business Platforman early-stage pan-African venture capital firm, has closed its fund at $46 million as it seeks to double down on “class-leading” companies across the continent.
The six-year-old company, which employs 11 people, first went to market to raise $40 million for this fund and reached a first undisclosed closing last December. When it first closed, most of its limited partners were primarily based in Africa, which was a deliberate effort, according to the founder and general partner. Kola Aïna.
“For us, it was strategic to obtain local capital for our first closing. But the second close, as you will see, will come from global funds of funds and DFIs where we have commitments,” he said in the December interview. “Ultimately, while foreign capital is essential, I think it is in their interest to ally with local capital from a risk mitigation perspective.”
Not only did Ventures Platform exceed its initial goal, but it also came up with some exciting products regarding its next set of sponsors. Standard Bank, Africa’s largest bank by assets, is one of the fund’s latest LPs, as are four development finance institutions (DFIs): International Finance Corporation (IFC), the British international investment (BII), Proparco with FISEA and AfricaGrow, a fund of funds managed by Allianz Global Investors. Other sponsors include social impact company A to Z Impact, corporations, commercial banks, global institutional investors and high net worth individuals (HNIs).
“No other fund of our type in the region has four DFIs as LPs,” Aina informed TechCrunch of the addition. “It’s great to have that diverse diversity, which is important in many ways because we can kind of draw on their experience and provide our portfolio companies with long-term capital.”
Ventures Platform has made over 60 investments since its launch in 2016 across sectors including fintech, insurance, healthtech, edtech, agritech, enterprise SaaS, digital infrastructure and accelerators of digital talent. Some notable names in his portfolio include Market strength, Mono, PiggyVestand Nomba and Reliance HMOtwo of YC’s most popular African startups.
The majority of these investments were made at the pre-seed and seed stages. However, since the first closing of this fund, Ventures Platform, which made a complete exit at Sale of Paystack to Stripe, has upped its game and is now cutting Series A checks for its portfolio companies, some of which can access follow-on (higher Series B) capital directly from the company’s limited partners. Aina noted that the Abuja and Lagos-based startup company intends to lead the pre-seed and seed rounds, investing an average of $250,000 while participating and writing follow-on checks of more million dollars in Series A rounds.
The closure of this fund comes at a time when deal flow activity in Africa has declined due to the withdrawal of local and international venture capitalists amid rising interest rates and a downturn in public markets worldwide. This turn of events is evident in the venture capital figures recorded in both years. For example, African startups raised just over $5 billion, a figure that many thought would be well exceeded by the start of 2022; however, as the end of the year approaches, this figure appears to be maintained or slightly exceeded.
Startups, during this period, are making efforts to extend their runways as long as possible and optimize their burn. And while Ventures Platform has provisions to support and scale its portfolio companies in times like this through a value-add avenue dubbed “Platform and Networks,” Aina, like many investors, is happy with the reset current state of the fundraising environment in Africa.
“Over the past two years, particularly in 2020 and 2021, there has been a lot of pressure to rush processes. But now we are very happy to be where the market is as we see valuations normalizing and the speed is more reasonable,” the general partner said. “We are therefore able to exercise our due diligence and governance properly. We are much more thoughtful about the type of founders we support as it is a long-term partnership, being attentive to business models and economics and ensuring we have sufficient capital reserves. capital to support our businesses.
Last December, Aina said Ventures Platform was strengthening its business in other markets outside Nigeria, actively seeking opportunities in regions including Kenya, Egypt and French-speaking West Africa. The update is that the company has backed 20 startups over the past year, some of which are from Senegal, Kenya, Uganda and South Africa.
Ventures Platform also made a series of strategic team additions at the partnership and senior leadership levels. First of all, Damilola Teidiformer director of startup support at the CcHUB incubation center, leads the company’s Platforms and Networks team and Desigan Chinniahone of the first engineers at eBay and a well-known investor who has backed some African startups, joins the company as a venture capital partner.
Next, Ventures Platform welcomes Dotun Olowoporoku as managing partner. Olowoporoku is among a small list of technology professionals who have played founder, investor and operator roles on the continent. He launched an on-demand food delivery platform in the UK a decade ago, ran Starta, a consultancy for start-ups and growing businesses on the continent, and worked as a director at a pan-African fund. Novastar Venturesand more recently, was Chief Commercial Officer (CCO) at TeamApt supported by QED.
“Kola and I intended to complement each other and take on roles that leverage our strengths, experience and expertise,” Olowoporoku said in a conversation with TechCrunch. “I am primarily responsible for leading the investment process and management, market analysis and research, portfolio support, communications and ecosystem engagement.” He will work closely with Aina as the two partners, widely considered among the most founder-friendly in the Nigerian tech ecosystem, look to make lucrative bets to help return this oversubscribed fund.