In a significant move underscoring the deepening financial ties between Japan and Africa, Sumitomo Mitsui Banking Corporation (SMBC), Japan’s second-largest bank, has made a strategic investment into the latest fund from the veteran venture capital firm, Novastar Ventures. This commitment is a clear indicator of a wider, calculated trend of Japanese corporate capital being strategically deployed into Africa’s vibrant and rapidly expanding technology startup ecosystem.
The investment from SMBC is directed into the Novastar Ventures Africa People and Planet Fund III, L.P. While the specific financial details of the transaction have not been made public, the fund’s mandate is to identify and support early and growth-stage enterprises that are actively developing solutions to pressing environmental and social challenges on the continent.
This investment is not an isolated financial play but a deliberate action under SMBC’s dedicated Social Value Creation Investment Fund. As a core entity within the colossal $2 trillion Sumitomo Mitsui Financial Group, SMBC has allocated a substantial budget of ¥50 billion (approximately $320 million) for this framework in the 2025 fiscal year. The fund is explicitly designed to back new technologies and industries that promise a “dual return” generating both significant financial gains and a measurable, positive social impact.
In a formal statement, the banking behemoth articulated its long-term vision. Acknowledging that Africa’s population is projected to constitute 25% of the global total by 2050, SMBC noted that this rapid demographic expansion has placed considerable strain on social infrastructure. The bank views Africa’s innovative startups as essential partners in addressing these infrastructure gaps, particularly in critical sectors such as fintech, logistics, agriculture, and green technology. For SMBC, the goal extends beyond financial returns; the bank intends to actively collaborate with the startups within Novastar’s portfolio, exploring opportunities to co-develop new business lines and financial products that align with its own long-term growth strategy in the region.
SMBC’s choice of partner, Novastar Ventures, is a testament to the venture capital firm’s established reputation. Founded in 2014, Novastar is one of the continent’s largest and most respected VC firms, with over $200 million in assets under management. With a strong on-the-ground presence, including offices in key innovation hubs like Lagos, Nigeria, and Nairobi, Kenya, Novastar has a proven track record of identifying and nurturing entrepreneurs who are building transformative businesses capable of reshaping markets and improving livelihoods.
SMBC’s investment is a prominent example of a much broader strategic push by Japanese institutions into African technology. This is not a series of coincidences but rather a coordinated effort by “Team Japan” to engage with Africa’s dynamic digital economy. Other recent examples include:
- Broad Ecosystem Investment: In 2024, Verod-Kepple Africa Ventures (VKAV) successfully closed a $60 million fund, backed by a formidable list of Japanese limited partners (LPs), including SBI Holdings, Toyota Tsusho Corporation, and Sumitomo Mitsui Trust Bank.
- Direct Startup Investment: Earlier this year, in February, SMBC’s own venture capital arm, SMBC Venture Capital, directly participated in a $12.7 million funding round for Hakki Africa, a platform facilitating the trade of used vehicles.
By channeling investments through experienced local fund managers like Novastar and VKAV, Japanese corporations gain vetted access to high-potential deals across the continent, effectively mitigating the inherent risks of entering a new and complex market.
The increasing flow of capital from major Japanese corporations serves as a powerful validation for the African tech ecosystem. It provides startups with access to “patient capital” long-term funding from strategic investors who are often more interested in sustainable growth and collaboration than in rapid exits.
For SMBC and its counterparts, these investments fulfill a dual mandate: they align perfectly with corporate goals for social value creation while strategically positioning them to capitalize on the next major wave of global economic growth, which many believe will originate from the African continent. As this financial and strategic bridge between Japan and Africa continues to strengthen, the opportunities for cross-continental partnerships, knowledge exchange, and market expansion for African startups are poised for significant growth.
