Ventures Platform has raised a second oversubscribed $84 million fund as the pan-African venture firm expands beyond its home market of Nigeria with a strategy shaped by a tougher, more selective venture market.
The firm plans to back early-stage founders in a variety of sectors, including fintech, healthcare, SaaS and other areas “where technology can address essential needs and build large, long-lasting businesses,” Kola Aina, a founding partner at the firm, told TechCrunch.
Of course, AI is part of that thesis.
“We are particularly interested in where AI changes the economics of serving African markets,” he said, noting its potential to reduce the cost of providing services and help overcome labor shortages. “For us, AI is most interesting when it is not just a feature, but an enabler of a completely different cost structure, business model or market.”
Entrepreneurship platformwhich is based in Nigeria, previously raised a $46 million Fund I in 2022 with a similar, although more limited, scope. The first fund focused primarily on pre- and seed rounds.
“It allowed us to demonstrate that our initial investment approach in Africa could work at an institutional scale and laid the foundation for Fund II,” Aina said.
Now, Ventures Platform is back with a larger fund and broader geographic mandate.
The firm is expanding its focus beyond Nigeria and has already issued Fund II checks to five companies based in Kenya, South Africa and Egypt. The size of the checks will be $3 million and the company expects to deploy the capital in the next three to four years.
“We are particularly interested in markets where technology can expand access to essential products and services, address critical infrastructure gaps, and create entirely new consumer categories,” Aina said.
The fundraising process took about a year and a half, and Aina described the environment as more “selective” than when Ventures Platform raised Fund I.
“LPs are asking tougher questions about performance, portfolio construction, liquidity, manager discipline and differentiation,” Aina said.
From their perspective, the market remains cautious as LPs demand more evidence that managers can convert portfolio value into realized returns. Capital is no longer supposed to be unlimited, especially after many LPs were hurt by companies going bankrupt a few years ago.
“The result is a much greater appreciation of capital efficiency, stronger fundamentals, governance, regulatory commitment and the importance of building businesses that can survive different financing cycles,” he said. “There is a much clearer understanding that building valuable companies and generating venture returns requires more than simply raising successive rounds of capital.”
This year, African startups have raised around $930 million across more than 200 deals. Last year, startups on the continent raised $1.16 billion across 447 deals.
As TechCrunch previously reported, the venture market is now a bar: LPs give capital to a handful of companies at the top and emerging managers with a track record they can rely on.
“Three years ago, there was still a lot of curiosity around the African opportunity. Today, LPs are waiting for proof,” Aina said, adding that this discipline is really healthy for the market.
“The conversation has moved from ‘Why Africa’ to ‘Why and how exactly are you going to generate returns,’” he said, adding that simply being a pan-African fund is no longer a strategy. LPs want to know more about access to top talent, how funds navigate individual markets and “why you have the right to win,” Aina said. “That combination of local depth and global connectivity is increasingly important as the ecosystem matures.”
In fact, he said that’s the biggest advantage his company offers. This latest generation of founders and fund managers has seen what it’s like to deal with an abundance of capital and almost nothing. He said it’s more important than ever to understand the institutional and market realities founders face while connecting companies to regional and global networks as they scale.
That pitch appears to have resonated with existing investors: 70% of LPs from Fund I returned for Fund II. Sponsors include the European Bank for Reconstruction and Development, Norfund (Norway’s development finance institution) and the Ashesi University Foundation of Ghana.
“We don’t take that for granted,” he said.
This article has been updated to reflect the amount of the fund raised.
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