Venture capital firm, Norrsken22 has announced the final close of its growth fund for African startups. The Norrsken22 African Tech Growth Fund was launched in 2022 to raise $200 million. It has, however, closed at $205 million, suggesting continued confidence in Africa's growth potential and the firm's leadership.
Founded by Niklas Adalberth, founder of payments unicorn, Klarna, and Hans Otterling, the firm boasts an investment team with more than a decade of experience investing in Africa. Natalie Kolbe, Ngetha Waithaka, and Lexi Novitske have all worked at or founded venture capital firms in Nigeria, Kenya, and South Africa.
It has also gathered a star cast of limited partners, with more than 30 founders of startups worth more than $1 billion. These include Flutterwave CEO, Olugbenga Agboola, Skype co-founder, Niklas Zennström, iZettle co-founder, Jacob de Geer, Delivery Hero co-founder, Niklas Östberg, Mojang co-founder, Carl Manneh, Kobalt Music founder, Willand Ahdritz, and King co-founder, Sebastian Knutsson.
In addition to these founders, family offices, SEB Pension Foundation, the International Finance Corporation, Standard Bank, Norfund, the US International Development Finance Corporation, and British International Investment joined the fund.
Investments out of this fund will be targeted at startups building fintech, edtech, medtech, and market-enabling solutions. So far, it has made investments in Tyme Bank, Sabi, Autochek, Shara, and Smile ID. It expects to have up to 25 companies in this fund.
According to Adalberth, who also founded the Norrsken Foundation, the Norrsken22 African Tech Growth Fund will enable the firm to tap into growing digitisation and a youthful population on the continent.
"We are excited to be partnering with so many promising startups that can have a positive impact across Africa. We are delighted to see an active and growing early-stage investor community growing across the continent, however, we still see a gap at growth-stage tech funding on the continent. We see a huge opportunity here, and are excited to continue investing at this stage," Kolbe, the firm's Managing partner, said in a statement.
Kolbe says the firm's investments will be split between Series A and B investments and follow-on investments. However, this does not rule out the possibility of earlier funding.
"We have put a small amount aside for the opportunistic earliest stage. If something comes to us and looks exciting, we may put small amounts of capital in, but that’s not where our focus is at all," she stated.
Despite hopes that Africa would buck the trend of venture capital slowdown globally, investments into African tech have slowed to pre-2019 levels. Novitske explains that long-term investors still see potential in investing in African startups. For its investors, the commercial return was equally as important as the economic impact of backing the fund.
"What we have seen in the market is that many companies that have been focused on operational efficiencies, margin expansion, and controlled growth have been able to capture market share," she said. "Given the pullback of some international investors, we're excited to be able to catalyze some of these incredible teams. The investment into African tech has 10x'ed over the past 5 years, but we are still less than 1% of global tech investments," she added.
Following recent events across the continent, more emphasis is now being placed on corporate governance and due diligence. Novitske maintains that the firm takes corporate governance seriously, but adds that it prioritises alignment with founders.
"Founders across our portfolio companies Sabi, Smile ID, Autochek, Tyme Bank, and Shara had put in the hard work in building out initial governance systems before we partnered with them, and in true "growth mindset" fashion, we are only working to make sure they are leaders in their markets. While we're a guiding eye on tools and global best practices, it's truly the companies that are driving strong governance practices," she noted.