New Delhi, April 1 -- Novastar Ventures, a Kenya-based venture capital firm that backs early-stage companies, has marked the final close of its third fund below target.
The Nairobi-headquartered VC firm has received commitments worth $147 million from its limited partners for the Novastar Ventures Africa People and Planet Fund III (NVIII), which aims to back climate tech-led ventures.
The fund was aiming to raise a corpus of up to $200 million, according to its disclosure with Green Climate Fund (GCF), the world's largest multilateral climate finance body, in November last year. GCF committed $40 million to the fund.
Apart from the GCF, the third fund's LPs include British International Investment, Norwegian development finance institution Norfund, Sweden's Swedfund, French development financier Proparco, and Spain's COFIDES.
A cohort of Japanese institutional investors also backed the fund. These include SBI Holdings, one of Japan's largest VC investors; Sumitomo Mitsui Banking Corporation (SMBC), one of Japan's largest banks; trading firm Mitsubishi Corporation; shipping firm Mitsui O.S.K. Lines, and the Japan International Cooperation Agency.
The fund's corpus is about 40% more than the $105 million that Novostart collected for its second vehicle, Africa Fund II, that it closed in May 2020. This fund deployed capital in at least 11 companies, including mPharma Data, Elephant Healthcare, software solutions provider Metro Africa Xpress, and cooling technology company Sure Chill, across sectors healthcare, education, housing, transportation, fintech, and energy. In its first outing, it raised $80 million for the investment vehicle that it closed in 2015.
"Novastar's investment approach has always focused on transformative businesses that generate lasting financial, social, and environmental value for the common good,"said Andrew Carruthers, co-founder and managing partner. "NVIII is a natural progression of that strategy, leveraging over a decade of experience backing businesses addressing Africa's biggest challenges, while driving a sustainable development pathway for Africa, and the world."
The latest fund will expand its focus beyond East and West Africa and deploy capital on a pan-African basis. It will invest in seed to scaled-up ventures, with initial ticket sizes ranging from $1 million to $8 million.
It has already backed six companies, including Breadfast, an Egyptian quick commerce grocery app; Sistema.bio Inc, a prefabricated modular biodigester package that includes a full suite of biogas appliances and connections; Nigerian food delivery company Chowdeck; Kenyan electric motorcycle fleet management firm Greenwheels; Kenya-founded electric mobility company ARC Ride; and MoPhones, which provides premium refurbished phones.
Novastar, launched in 2014, primarily invests in education, healthcare, agri-businesses, food, and water sectors which target low-income communities in Africa.
Published by HT Digital Content Services with permission from VC Circle.