African startups have another $100 million in VC to pitch for after Novastar Ventures’ latest raise. The Nairobi and Lagos based investment group announced it has closed $108 million in new commitments to launch its Africa Fund II, which brings Novastar’s total capital to $200 million.
According to a TechCrunch report, with the additional resources, the firm plans to make 12 to 14 investments across the continent, according to Managing Director Steve Beck.
A notable update to Novastar’s VC focus is geographic scope. The firm was originally co-founded in Kenya by Beck and British investor Andrew Carruthers and built its first portfolio largely around companies based in East Africa. Novastar Ventures made 15 investments with its first fund, including companies such as Uganda and Kenya focused energy startup SolarNow and agtech venture M-Farm.
Before closing its Africa Fund II, Novastar Ventures had already made several investments in West Africa, including leading a round in Nigerian on-demand motorcycle transit startup Max.ng and backing Ghanaian health company, MPharma. Novastar opened an office in Lagos in 2019.
On the types of startups Novastar will target with its new fund, the focus is more on mission than industry silos, according to co-founder Steve Beck. “We’re sector agnostic. I would describe us more as a segment fund than a sector fund,” he said.
“We really try to look for businesses called breakthrough businesses, [those] that are addressing the biggest problems in the largest markets.”
That has led Novastar Ventures to invest in digital companies in education, information access, agtech, mobility and off-grid energy.
“Essentially what we’re doing is looking for those businesses that are addressing the basic needs, basic goods and services across the true mass markets of the continent,” said Beck.
On investment amounts and types, Novastar Ventures is fairly flexible on ticket size, from seed to later stage.
“We’re gonna…have some portfolio companies where we put to work a million dollars or less or were going to have somewhere we put $8 or $9 million dollars in through capital rounds. That’s…the deployment strategy,” Beck said.
Novastar Ventures works closely with its portfolio companies, according to its co-founder. “We’re very active investors and always take a board seat to be close to the entrepreneurs. We often are the first institutional investor that they have.”