Ventures Platform, one of the most active early-stage investors in Africa, has raised another $64 million

Lagos-based Ventures Platform, one of Africa’s most active early-stage investors, has raised $64 million so far for its second fund, targeting a final close of $75 million, co-founder Kola Aina told TechCrunch.

Investors include the Nigerian government, through the Investment in Digital and Creative Enterprises (iDICE) programme, the first time this government has invested in a venture capital fund. This is important, given that Nigeria’s thriving startup community is home to the largest number of emerging startups on the continent.

Other limited partners in Ventures Platform’s second fund include IFC, British International Investment (BII), Proparco, Standard Bank, MSMEDA and AfricaGrow, along with European family offices such as Alder Tree Investment and prominent global backers such as former Y Combinator CEO Michael Seibel. Aina says 70% of investors from her previous fund have returned.

Nigeria’s selection of this company for its first investment is perhaps not surprising. Since its founding in 2016, Ventures Platform has built a reputation for spotting the country’s emerging startups early, something it hopes to replicate in other African markets.

Ventures Platform launched its first institutional fund, a $46 million vehicle, in 2022 to focus primarily on pre-seed and seed rounds.

With the second fund, the company will also seek Series A investment, while “investing with more conviction” and seeking larger ownership stakes, Aina said. This should be good news for founders in the region, as Series A funding has become more difficult to obtain after years of Silicon Valley companies withdrawing.

While Ventures Platform plans to deepen its presence in Nigeria, the company has begun establishing its presence in French-speaking West Africa and North Africa, regions where it has already made some investments, in order to gain early access to promising deals.

To date, the African venture capital firm has funded more than 90 startups across the continent. The company says most of these investments are “paintech” companies across fintech, healthtech, agritech, edtech and AI – companies that seek to de-consume, or in simpler terms, serve markets where people have little access to service.

Aina points to wallet companies Moniepoint Unicorn backed by Visa and Paystack owned by Stripe, two fintech companies that have opened up new markets for online payments and banking for small businesses..

“Many small businesses couldn’t sell outside their immediate neighborhood before Paystack because they couldn’t accept payments online,” he said. “Moneypoint, on the other hand, has pushed financial inclusion into the nooks and corners of this country. This is innovation that creates the market.”

Other notable portfolio companies include Left Lane-backed remittance app LemFi, Gates Foundation-backed SeamlessHR, Norfund-backed OmniRetail, QED-backed fintech Raenest, and healthtech-backed Remedial Health.

Even as innovation accelerates and funding in Africa’s tech ecosystem exceeds $12 billion since 2015, stakeholders are expressing new concerns about lack of exits and liquidity events. This reality has made fundraising more difficult for many venture capital firms on the continent, most of whom are emerging managers who, as a global group, have faced a difficult climate over the past two years.

However, at the time, Ventures Platform was able to attract local and international limited partners for two funds despite the market uncertainty.

“We have limited partners who understand how venture ecosystems have evolved in other markets and know that we will get there in the long term. Another reason is that we have recycled capital from our previous syndicates,” Aina said, referring to the firm that brought back four out of six syndicates (including five angel syndicates) between 2016 and 2022. The investor also claims that the first fund ranks among the best-performing funds globally based on TVPI and IRR for its legacy year.

Still addressing questions about exits as well as the slowdown in the continent’s funding (from $5 billion in 2021 to $2 billion last year), Aina adds that Africa’s long-term potential has not diminished, and describes the continent as “the purest asymmetric play for non-harmonic alpha” – talk of adventure for high-risk, high-direction bets.

“If you are allocating global capital and looking for true diversification, Africa is the place to be,” he said. “By 2050, one in four people will be African. Our GDP growth rate is double that of the US, yet most of the value remains offline. The opportunity is huge if you have patience and local context.”