Launch Africa closes first fund at $36.3 million

Launch Africa Ventures, a Pan-African venture capital fund, announced the close of its $36.3 million fund, which it has primarily used to invest in B2B and B2B2C startups across Africa. 

Since inception, Launch Africa has backed 108 startups across 21 African countries including Nigerian neobank Kuda, Kenyan B2B e-commerce retail platform MarketForce and Tunisian edtech startup GOMYCODE.

Zachariah George launched the firm’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 by March 2022. 

According to George in an interview with Techcrunch, Launch Africa will continue to expand its geographic footprint and back startups in other countries. “I can’t think of a single fund that covers many markets as we do,” the managing partner said. “We’re doing deals in the DRC, Madagascar, Sudan, Botswana, Benin, Togo. People use the word pan-African loosely, but when we say pan-African, we truly mean what we do.” 

Launch Africa, with over 238 retail and institutional investors from 40 countries per its statement, has invested over $24 million in its portfolio companies. Most of these investments are one-time checks, as the early-stage VC seldom takes on subsequent rounds.

“In fund one, we have limited capacity for follow-ons. If we were to reserve a significant portion of our fund for follow-ons like many other funds do, we wouldn’t be able to cover the whole continent and multiple regions and products,” said George. “Any of our portfolio companies that need significant capital at the next round of funding, we provide an opportunity for our LPs to back them.”https://jac.yahoosandbox.com/1.1.0/safeframe.html

Launch Africa says it helps LPs with due diligence and waives fees when they invest alongside the fund’s lead checks. These LPs have deployed over $14 million in Launch Africa portfolio companies.

“The Launch Africa team works with founders and expert advisors to fast-track exit opportunities for investors.” said Du Plessis in a statement. “Providing our exit strategy during these challenging times instills investor confidence and brings significant benefits to the African tech ecosystem.”

Some of Launch Africa’s LPs include German fintech-focused CommerzVentures. The firm’s managing partner Patrick Meisberger said his firm was “pleased to partner with Launch Africa Ventures to invest in some of the most exciting fintech investment opportunities in Africa.” Fintech contributes heavily to Launch Africa’s portfolio; over 38% of its companies are from that segment. The rest include e-commerce and marketplaces (16%), health tech (13%), logistics and mobility (12%), data analytics/AI (11%) and edtech (7%).

Venture capital firms like Launch Africa sometimes come under heavy fire for backing too many companies within a short period. Yet, George views the company’s strategy as necessary given the stage Launch Africa plays and the broader Africa’s early venture capital market.https://jac.yahoosandbox.com/1.1.0/safeframe.html

“There’s very little strategic non-financial value among pre-Series A investment on the continent. Most of the money that comes at the early stages are from angels, friends and family and accelerators, and very regional VC firms. There’s nothing wrong with that. I mean, it’s the backbone of any mature industry,” he said. “But it’s very important to have a plan to scale into multiple geographies and product verticals, and you can’t do that by playing low.”

George asserts that the ability to invest significant capital at the early stage and founder-friendly terms with a lot of non-financial value-adds 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 specialists in early-stage investing,” George said.