Launch Africa, the venture capital firm that has backed more than 100 startups, closes its first fund at $36.3 million – TechCrunch
Pan-African Venture Capital Fund Launch Africa Ventures today announces the closing of its $36.3 million fund, which it has primarily used to invest in B2B and B2B2C startups across Africa.
In an interview with TechCrunch, Managing Partner Zachary George said Launch Africa has supported 108 startups in 21 African countries. These include Nigerian neobank Kuda, Kenyan B2B e-commerce platform MarketForce and Tunisian edtech startup GOMYCODE.
Although these startups have reached growth stages, the Mauritius-based company invested in them earlier in their journey. It typically backs seed and pre-Series A startups and cuts average check sizes between $250,000 and $300,000. Some startups at these stages include Sudanese fintech Bloom, Botswana-based insurtech Alpha Direct and South African big data platform Carscan.
George says the company, considered the continent’s most active early-stage venture capital firm, will continue to expand its geographic footprint and support startups in other countries. “I can’t think of a single fund that covers many markets like we do,” the managing partner said. “We do business in the DRC, Madagascar, Sudan, Botswana, Benin, Togo. People use the word pan-African loosely, but when we say pan-African we really mean what we do.
George launched the company’s Fund 1 alongside Janade du Plessis at the height of the pandemic in July 2020. The fund achieved its first close in September 2020 and a final close in March 2022.
Both partners had extensive funding and investment experience prior to launching Launch Africa. An angel investor, George worked as an investment banker on Wall Street before co-founding two well-known accelerator programs in Africa: Barclays Rise Growth Accelerator and Startupbootcamp Afritech. On the other hand, Du Plessis served as a former Chief Investment Officer at the African Development Bank and founded Abrazo Capital, a social impact investment company.
Launch Africa, with over 238 retail and institutional investors from 40 countries according to its statement, has invested over $24 million in its portfolio companies. Most of these investments are spot checks, as early-stage venture capital rarely takes subsequent turns.
“In the first fund, we have limited capacity for follow-ups. If we were to set aside a significant portion of our fund for follow-ups like many other funds do, we would not be able to cover the entire continent and multiple regions and products,” George said. “Any companies in our portfolio that need significant capital in the next round of funding, we offer our LPs the opportunity to support them.”
Launch Africa says it helps LPs do their due diligence and waive fees when investing alongside fund principal checks. These LPs have deployed over $14 million in Launch Africa portfolio companies.
“The Launch Africa team works with founders and expert advisors to accelerate exit opportunities for investors.” du Plessis said in a statement. “Providing our exit strategy in these difficult times instills investor confidence and brings significant benefits to the African tech ecosystem.”
Some of Launch Africa’s LPs include fintech-focused German companies CommerzVentures. The firm’s managing partner, Patrick Meisberger, said his company was “pleased to partner with Launch Africa Ventures to invest in some of the most exciting fintech investment opportunities in Africa.” Fintech is a strong contributor to Launch Africa’s portfolio; more than 38% of its companies belong to this segment. The rest includes e-commerce and marketplaces (16%), health technologies (13%), logistics and mobility (12%), data analytics/AI (11%) and edtech (7%).
Venture capital firms like Launch Africa are sometimes criticized for backing too many companies in a short time. Still, George sees the company’s strategy as necessary given the stage that Launch Africa plays and Africa’s early stage venture capital market in general.
“There is very little non-financial strategic value among pre-Series A investments on the continent. Most of the money that comes in the early stages comes from angel investors, friends, family, accelerators, and very regional venture capitalists. There is nothing wrong with that. I mean, it’s the backbone of any mature industry,” he said. “But having a plan to scale across multiple geographies and product verticals is very important, and you can’t do that by playing low.”
George says the ability to invest significant early-stage capital and founder-friendly terms with lots of non-financial value added accelerates a company’s growth from what would typically take three to four years to as little as 12 to 18 months. “That’s the benefit of positioning ourselves as early-stage investment specialists,” George said.
Launch Africa has no intention of slowing down despite the gloomy VC landscape; the company could double down on some of its portfolio companies at better discounts. Like a few local investors who spoke with TechCrunch recently, Launch Africa said it would provide follow-on capital — via bridge and expansion rounds — especially to those going through cash flow crises.
“We work hand-in-hand with each portfolio company in preserving capital and generating income for their unique business challenges,” said Margaret O’Connor, Chairman of the Board of TechCrunch. “We’re trying to help founders understand how to navigate a tough macro economy and focus on how to make more money faster so they continue to grow.” O’Connor has experience as an entrepreneur, MasterCard executive and government advisor in the US, UK, Asia and Europe in her investment management portfolio.
That said, Launch Africa is not only interested in holding Africa’s most active startup fund moniker. It also wants to build a reputation for embracing diversity and inclusion. The company says these themes are “at the heart of its investment philosophy”, as shown by two indicators: 91% of founders in its portfolio are African, while 20% are women.