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Global VCs throw their weight behind African startups

July 20, 2012 • Features

Start-ups continue to mushroom across Africa’s fertile business and ICT landscape. Few of these would be in a position to move past the initial startup phase, if it was not for the involvement of venture capitalists (VCs). But, this is very much a mutually-beneficial situation: VCs want to partner with companies that demonstrate the capacity to ensure a return on investment, whilst start-ups need the capital and support that this private investment can offer.

There is a growing appreciation in some quarters for the role that venture capitalism can- and does play across many developing economies in Africa. (Image: Flickr/motiqua)

From the level of discussion taking place online involving business leaders, investors and other market stakeholders, there is a growing appreciation in some quarters for the role that venture capitalism can – and does play across many developing economies in Africa.

At the same time, there are rumblings from some business owners about the need to up levels of interaction.

A GhanaWeb report  said that at the 9th Annual African Venture Capital Association (AVCA) Conference in April, co-hosted by the Venture Capital Trust Fund (VCTF) and the Ghana Investment Promotion Council, it was acknowledged that whilst Africa was seen as attractive to investors and ‘rising’ in importance as an investment destination, there is still a great deal of work to be done to promote the continent.

If one looks closer at online information about VC activity in Africa, it is clear that established, home-grown VC firms are aware of the opportunities that exist. At the same time companies from abroad are eager to enter the African space and take advantage of high-growth areas, especially ICT and telecommunications.

A recent column published by Reuters Online  said according to the first Global Venture Capital Conference Survey, international VCs have a high confidence investing in key ICT sectors like cloud computing and social media.

There are many examples of firms that are doing business in Africa, with Africans for Africa. They are affiliated to regulatory bodies, such as the South African Venture Capital Association and African Venture Capital Association, and have established investment portfolios.

According to writers for the VC4Africa blog, AVCA has in the region of 400 investors and organisations like the Meltwater Entrepreneurial School of Technology and Innohub have been established to help start-up companies.

Thousand Hills Venture Fund

From its offices in Denvor, Colorado, and Kigali, Rwanda, Thousand Hills Venture Fund manages foreign investment funds in Africa.

Its core strategy is to develop innovative investment vehicles for overseas investors to co-invest with local operations in Africa. Its investment portfolio includes Rocket 2020, a Rwanda-based company that provides technology to help facilitate commerce in the country. Robert Fogler is the principal founder of the company.

Sawari Ventures

A global venture capital firm focused on the Middle-East & North Africa region. It is focused on early and growth-stage investing within tech media, telecoms, eCommerce and financial services. Included in its portfolio are a number of companies, including Circle Tie (multi-platform location based mobile social network for Egypt and United Arab Emirates (UAE), as well as Flat6Labs dedicated investment vehicle targeting seed stage investments.

Hasso Plattner Venture Africa Advisory (Pty) Ltd.

A gateway to established entrepreneurs and affiliate of Hasso Plattner Ventures Europe, the firm facilitates international success of African ingenuity and expertise.

Its client portfolio includes Bozza (mobile application for Africa), 22Seven (independent online personal financial service) and Inala (focused on electronic engineering within fixed line and GSM telecommunications and broadcast industries).

Savannah Fund

This seed fund was launched in Nairobi with the intention to create and sustain a ‘Silicon-Valley style accelerator model for the East Africa region. According to online information available, the fund was founded by Erik Hersman, Paul Bragiel and Mbwana Alliy. The focus is on mobile and Web start-ups.

Fanisi Venture Capital Fund

Established in 2009 in Luxembourg, the Nairobi-based company is focused on equity investments in high growth businesses across Africa in various industries, including ICT and retail. Among its investments is Craft Silicon, a Kenyan IT company, Paystream Limited (which provides point of sale terminals) and Elris Communication Services Ltd., which provides network implementation and network management services.

Intel Capital

In June 2011 the investment division made public its investment in JSE-listed Allied Technologies (Alltech). A global operation with an extensive portfolio, the team includes Arvind Sodhani, Executive Vice President and President, Intel Capital.

Matamba Anonaka Technology Holdings (MATHS)

Described as “the first technology focused venture capital company in Zimbabwe”, Matamba Anonaka Technology Holdings was established in 2010 and is focused on the country’s technology sector.

Its investment portfolio incorporates Starfish Mobile Zimbabwe, a provider of mobile content services, as well as ZimTowers (Pty) Ltd., an independent tower company established to construct and rent multiple telecoms infrastructure. Geoffrey Goss is the company’s CEO.

Adlevo Capital

A Mauritius-based private equity fund manager. Among its clients is Pagatech Ltd., an established provider of mobile money transfer services in Nigeria and InterSwitch Limited, a Nigeria-based provider of electronic transaction switching and payment processing service in West Africa.

Added to the list is Rancard Solutions, a software company focused on the mobile market and mobile transactions across Africa. Yemi Lalude is the Managing Partner. According to the company’s website, prior to joining Adlevo Capital, Lalude was a Principal at GGV Capital, a Silicon Valley-based expansion stage tech venture capital company.

Foreign interest on the increase

Recent media reports focusing on the investment by international companies in Africa and in ICT and telecommunications demonstrate the scale of interest by global firms in the continent.

For example, Swedish VCfirm, Investment AB Kinnevik, recently made headlines for its funding of Nigerian-based digital media and entertainment company, Iroko Partners. The VC is reportedly increasing its investments into Africa, which, according to the report, currently doubles that of North America and Asia combined.

Intel Capital, Intel Corporation’s global investment arm, recently announced a tech co-investment initiative with Adlevo Capital Managers into Ghana-based Rancard Solutions

In an interview with IT News Africa, Samuel Mensah, Intel Capital Director for Sub-Saharan Africa, said, “We see enormous potential especially in the penetration of mobile phones. This is becoming the first experience of the Internet for many Africans, which directly leads to the migration to laptops and tablets. We will keep investing in applications and services that will keep Africans interested in the Internet, but it has to be relevant to the lives of people in Africa.”

Chris Tredger, Online Editor

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