Tech investment fund Norrsken22 has closed its first African technology growth fund at R3.7bn for investment in SA, Nigeria, Kenya and Ghana.
This development will be good news for the continent’s venture capital ecosystem after the closure earlier this year of Naspers Foundry, which had earmarked R1.4bn for local investment.
On Friday, the fund said it had closed its capital raise at $205m (about R3.73bn), exceeding its $200m target.
Norrsken22 is a tech growth equity fund “partnering with ambitious entrepreneurs to scale disruptive businesses across Africa”.
The fund, which has already backed the likes of Tyme Bank, was formed in 2022 by Niklas Adalberth, founder of the Norrsken Foundation and payments unicorn Klarna; Hans Otterling, partner at technology investment firm Northzone; and an investing team that is said to have decades of experience investing in Africa.
Since the fund’s first close, a number of large institutional investors joined the investor base including Standard Bank, British International Investment (BII), the International Finance Corporation (IFC), the US International Development Finance Corporation (DFC) and Norfund.
“The timing of the fund ideally positions Norrsken22 to support a growing African tech tailwind. The transformative power of technology can leapfrog traditional ways of doing business, and Africa has the opportunity to lead the world with its solutions,” said Natalie Kolbe, managing partner of Norrsken22.
The fund has so far made four other investments: SA challenger bank Tyme Bank, African business-to-business digital commerce platform Sabi, identity verification solution Smile ID, and vehicle financing platform Autochek.
Young demographic
It said the strong investor interest reflects the fund’s “intended exposure to several megatrends playing out on the African continent, the key ones being a young demographic that is rapidly urbanising and digitally savvy”.
According to the African Private Equity and Venture Capital Association (AVCA), venture inflows to Africa in 2023 stood at $6.5bn across 853 deals. This is a drop in the ocean, however, compared with the $240.9bn channelled to US start-ups in the same period.
The Southern African Venture Capital and Private Equity Association (Savca) said R1.12bn was invested in SA start-ups in 2022 into 70 entities through 195 investment rounds, with 65 different funds involved.
Norrsken22’s investment team is led by Kolbe, who was previously global head of private equity at Actis, as well as Ngetha Waithaka, another Actis alumni, in Kenya, and Lexi Novitske, who previously founded Acuity Venture Partners in Nigeria. Norrsken22 has teams on the ground in SA, Nigeria, Kenya and Ghana.
We see a huge opportunity here and are excited to continue investing at this stage.
The fund trumpets its association with the founders of billion-dollar start-ups/companies, referred to as “unicorns”. It is backed by a board of founders who have built companies like Nigeria’s Flutter wave, Naspers-backed DeliveryHero, Swedish fintech company Klarna, and video conferencing service Skype.
“We are excited to be partnering with so many promising start-ups 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,” said Kolbe.
“We see a huge opportunity here and are excited to continue investing at this stage.”
According to AVCA, West Africa attracted the largest proportion of venture capital deal volume in Africa, accounting for 30% of the total in 2022. This was driven by Nigeria, the most active country by volume at 22%.
Financial, mostly fintech, was the most active sector by venture capital deal volume at 31% and attracted the largest share of venture capital deal value at 42%.
This is in line with trends in the SA market where fintech companies continue to attract the largest investors and some of the biggest deals.
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