Pan-African venture capital fund, Novastar Ventures Africa has closed its second fund, the Novastar Ventures Africa Fund II (NVAF II), with total commitments of $108 million.
The Nairobi-based fund closed its first fund of $80 million alongside a $12.5 million co-investment facility. This means NVAF now manages more than $200 million of capital making it one of the largest funds for early and growth-stage businesses in Africa.
At first, Novastar’s first fund was limited to East Africa. This time the fund, NVAF II, has expanded its geographic reach to West Africa.
With offices in the entrepreneurial hubs of Nairobi and Lagos, Novastar says it backs start-ups that “address proven demand for basic goods and services with innovative business models that widen access, improve quality, and lower cost for the mass market in these emerging economies.”
The fund has already led or co-led financing rounds in two West African companies so far. Ghanaian healthtech startup, mPharma, and Nigerian on-demand motorcycle-hailing and logistics startup, Metro Africa Xpress (MAX). It has also invested in African-focused cooling startup, Sure Chill.
Speaking on the fundraise, co-founder and Managing Partner Andrew Carruthers said,
“While Novastar now manages more than $200 million of capital, we don’t think of ourselves primarily as fund managers. The focus and real interest in our work is partnering with high-capacity, ambitious entrepreneurs to help them bring their ideas to life and multiply their impact.
“The COVID-19 pandemic has obviously compounded the significant challenges for entrepreneurs building businesses in our territories. The strongest entrepreneurs will seize the opportunities that arise during the crisis, and we expect to see more entrepreneurial talent released from ‘safe jobs’ that are no longer safe.”
Primary institutional investors like AXA Impact Fund II, CDC Group, European Investment Bank, Dutch Good Growth Fund, FMO have since backed the fund since its first close. In the second round, Novastar Ventures says they have either matched or increased their commitments.
“We are grateful for our investing partners who have helped us capitalize NVAF II at the beginning of this difficult period. Many of the world’s most innovative, successful businesses today were born out of recessions and crises of various kinds.
“Our investment strategy is well suited to this environment. We back breakthrough businesses that serve the common good; ones that will have staying power and profoundly positive impact precisely because they are innovating ways to address basic needs and the biggest challenges in our region,” co-founder and Managing Partner, Steve Beck said.