“/>Image credit: Verode-Keppel Africa
Last month, pan-African venture capital firm Verode-Keppel Africa Partners reached the second close of its first fund (Verode-Keppel Africa Ventures), targeting African startups at $43 million. Verode-Keppel Africa Ventures (VKAV) achieved its first close last March (at $20 million) and aims to close at $100 million by the end of the year; If reached, VKAV would join a relatively small number of Africa-focused funds with total capital allocations of $50 million or more.
Launching in 2022, VKAV is a joint venture between Verode Capital, a private equity firm, and Keppel Africa, a Tokyo-based venture capital firm that is an active investor along with other Japanese small-cap funds such as Samurai Incubate and Uncovered Fund. African startups with particular interest in fintech, e-commerce and logistics in recent years
For early-stage investments in Africa, Keppel Africa stands out for its check-writing speed and the number of deals it has done, similar to Mauritius-based Launch Africa. Since launching in 2018, Keple Africa has supported over 100 startups (across 11 African markets), investing between $50,000 and $150,000 at the pre-seed and seed stages.
Another desirable feature of the fund was how it linked its portfolio companies to Japanese strategic investors. According to Satoshi Shinada, one of Keple Africa’s general partners, by keeping Japanese investors as limited partners — who also invested directly in portfolio companies — Keple Africa wanted to replicate similar exit events happening across Asia across Africa. However, this is not easy to execute when a firm invests too early. It has to operate at a growth stage where multinationals and large corporations have an appetite to exit. Hence, the synergy with Verode Capital.
“We [Kepple and Verod] A possible collaboration has been discussed for some time. From Verode’s perspective, they are investing in nontech companies as a private equity fund. But recently, they see more opportunities to create collaborations between tech companies and nontech portfolio companies,” Shinada, who founded Keppel Africa with Ryosuke Yamawaki, told TechCrunch in an interview. “They [Verod] If they can bring more technology into their portfolio companies as PE funds, they can increase efficiency or productivity. So there are expected synergies between existing nontech PE portfolio companies and startups.”
Whether raising growth equity capital or buying a controlling stake, private equity investors tend to target more mature startups with a proven track record and want to expand, and such firms, including Leapfrog Investments and gender-lens-focused Alithea Capital Activities, in the startup scene, have increased in recent years.
Verode, which closed its third fund in 2019 at $200 million, has made two notable investments in technology ventures: Tangerine Life, a digital insurance provider it acquired before merging with ARM Life, one of Nigeria’s leading insurers; and Daystar Power, a solar energy solutions provider that exited oil and gas multinational Shell last December. Providing operational support and taking a hands-on approach to taking a growth-stage startup to exit is what portfolio startups at VKAV should expect from a PE firm, which also offers HR, legal finance, accounting, regulatory support, strategy and ESD capabilities. by doing By combining PE and VC capabilities, Keple Africa strives to embed its VC mindset into PE firms backed by Verode Resources.
VKAV, which expects to deploy $100 million from 2022 to 2026, continues where Keppel Africa left off. While Keple Africa invests in pre-seed and seed startups, VKAV is supporting Series A and B startups with $1.5 million to $3 million checks (this can be double that of some of Keple Africa’s top-performing startups if they fit VKAV’s investment thesis eats. ) Shinada, now a partner at VKAV alongside Yamawaki and Ori Okolo, notes that the fund is sector agnostic. Its investment thesis is defined by three business types: infrastructure and platform-type, B2B expertise and lifestyle businesses facilitated by Internet penetration. Its portfolio companies include Shuttler, Julaya, Move, Naope, Chari, Civient, Nowe and Cocoa Networks.
The fund’s limited partners, mainly Japanese institutional investors, include Toyota Tsusho Group, SBI, Japan International Cooperation Agency (JICA) and Sumitomo Mitsui Trust Bank (SMTB), some of which have invested in Keppel Africa’s portfolio companies Autocheck and Lifestore.
“We have facilitated this collaboration between African startups and large corporates in Japan. As Keple Africa, we brought seven Japanese companies to make their first direct investment in African startups like AutoCheck and Lifestore and now we can institutionalize it more because we have onboarded them as our LPs which I think is a rare example. African VC space,” Shinada noted. “They invested in us because they want to invest more directly in the growth phase of these African startups. We are looking at them being our co-investors in future rounds and potential acquirers of some startups. I think that makes us very unique.”