In a significant development for the African startup ecosystem, Norrsken22 has announced the final close of its debut fund at $205 million. The growth-stage investment firm is now poised to invest in approximately 20 startups across various sectors, with a focus on Series A and beyond.
Background and Investment Strategy
Norrsken22 was founded by a team of experienced investors who recognized the need for more capital in the African startup ecosystem. The fund’s target remains investing in around 20 startups, with an average ticket size of $10 million. However, it may go as high as $16 million for follow-on rounds in select portfolio companies.
The firm has adopted a growth-stage investment strategy, focusing on preparing portfolio companies for exits. According to managing partner Tage Kene-Okafor, Norrsken22 thoroughly evaluates potential exit scenarios, including identifying potential buyers and assessing valuations. This diligence is critical, as the firm has declined investments where a compelling exit case was not evident.
Investment Focus Areas
Norrsken22 will concentrate its investments in sectors with high growth potential, such as e-commerce, fintech, healthtech, and edutech. The firm’s advisory council of business leaders from multinationals across various industries will provide valuable insights into the African market.
Growth-Stage Firms Addressing Capital Shortage
Several other growth-stage firms have raised one to two funds over the past couple of years to address the shortage of capital in Series A and beyond. These include Partech Africa, TLcom Capital, Algebra Ventures, Sawari Ventures, and Novastar Ventures.
Opportunistic Early-Stage Investments
While Norrsken22’s primary focus is on growth-stage investments, it has allocated a small amount for opportunistic early-stage investments. "If something comes to us and looks exciting, we may put small amounts of capital in," Kene-Okafor said.
Preparing Portfolio Companies for Exits
A key aspect of Norrsken22’s investment strategy is preparing portfolio companies for exits. The firm evaluates potential exit scenarios, including working with portfolio companies to identify potential buyers and assessing valuations.
International Strategic Buyers and Consolidation
Norrsken22 will explore exits through international strategic buyers and consolidation involving local industry leaders. Large multinational corporations in Africa could also present exit opportunities to startups, as they often struggle to innovate in-house and may seek innovation by acquiring tech businesses.
Support from Advisory Council
The fund’s advisory council of business leaders from multinationals across various industries will provide valuable insights into the African market. This support will be crucial in helping Norrsken22 navigate the complexities of investing in Africa.
African Startup Ecosystem Growth
Norrsken22’s achievement is a testament to the growth and potential of the African startup ecosystem. The fund’s success will likely inspire more investors to focus on growth-stage investments, further supporting the development of startups across various sectors.
Conclusion
In conclusion, Norrsken22’s final close at $205 million marks a significant milestone for the African startup ecosystem. With its focus on growth-stage investments and preparation for exits, the firm is well-positioned to support the development of innovative startups across various sectors. As the fund continues to invest in approximately 20 startups, it will undoubtedly contribute to the growth and success of the African startup ecosystem.
