Novastar Ventures fund closes at $108m for investments in East, West African startups


The Novastar Ventures Africa Fund II has held its final close at US$108 million, which will be used to back breakthrough businesses in both East and West Africa.

With offices in Nairobi and Lagos, Novastar is one of the largest platforms dedicated to financing early and growth stage businesses in Africa. The firm backs startups that address proven demand for basic goods and services with innovative business models.

The company’s first fund of US$80 million, together with a US$12.5 million co-investment facility, backed 15 companies and continues to invest follow-on capital into the successful businesses in its portfolio.

NVAF II – which held its first close in November 2018 – targets new early and growth stage businesses, and has total commitments of US$108 million.

As with its first fund, NVAF II is a multi-round investor with the scale and flexibility to tailor support to each portfolio company’s stage of development, from seed to scale. While the first fund was limited to East Africa, however, NVAF II expands its geographic reach to West Africa.

“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,” said the firm’s co-founder and managing partner Andrew Carruthers.

“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.”

Seeing strong deal flow in both East and West Africa, NVAF II has already led or co-led financing rounds in three companies: Nigerian on-demand motorcycle ridesharing and logistics company Metro Africa Xpress (MAX), Ghanaian tech-driven healthcare company mPharma, and Nigerian cooling tech company Sure Chill.

CDC Group, European Investment Bank, Dutch Good Growth Fund, FMO, Proparco, Norfund and SIFEM helped to capitalise the new fund. Co-founder and managing partner Steve Beck said Novastar was grateful to its investing partners who had helped it capitalise 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,” he said.

Source: Disrupt Africa (Published May 13, 2020)


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