Just one year after its initial closure, Partech Africa II concluded at €280 million ($300 million+).
Partech Africa, which had sought €230 million before financing, becomes the biggest African startup fund at that scale.
Partech Africa’s fund closure is important for global VCs and institutional investors leaving Africa. According to a Partech analysis, investment activity in the region dropped by 50% in 2023. Due to global economic trends and local constraints, African entrepreneurs received $2.9 billion to $4.1 billion in venture funding last year, down from $4.6 billion to $6.5 billion in 2022.
Partech found that seed-stage agreements dropped 33% and growth-stage deals dropped 39%. Partech Africa, which leads rounds, cannot stop this trend, but its concentration on seed to Series C financing may help businesses in these difficult times.
Partech Africa’s general partners said the business hopes to help creators from early to later rounds using its ecosystem position. “The capacity to anchor rounds at all stages, from seed to early growth, is more critical than ever,” states Cyril Collon.
In an email to Eltrys, Tidjane Deme said the VC firm’s growing staff will help deploy cash and support portfolio firms through these phases. Partech Africa, with offices in Dakar, Nairobi, and Dubai, has just opened a Lagos office, where it’s recruiting to work with startups in the area. A third of the firm’s portfolio firms are situated there. He added that the business would use most of its second money between Series A and B rounds.
Partech Africa and international fintech investor QED seeded Revio, a South African payment orchestration platform, with money from its second fund. A Senegalese e-commerce business and an Egyptian proptech have also received secret financing. According to Partech Africa, it would invest $1 million to $15 million in over 20 enterprises.
In its inaugural fund, the Dakar-based venture capital business sponsored 17 firms in fintech, agritech, health tech, retail, FMCG, and agency banking, which are vital to Africa’s economy and jobs. Wave, TradeDepot, Yoco, and Reliance are notable investments.
“Companies from the first fund can benefit from follow-on capital from the first fund but not from the second,” Deme said of the firm’s deployment approach. “We keep supporting Fund 1 companies with capital and other ways.”
Last February’s first closure featured more fund strategy.
Partech Africa has varied investors. Development financing institutions, commercial investors, African fund-of-funds, and family offices were limited partners at its initial closure. U.S. and Middle Eastern pension funds, sovereign funds, the Dubai Future District Fund (DFDF), and Africa Re participated in its second closing.
“We are grateful for the support and commitment of our investors: almost all Fund I investors reinvested, and some more than doubled their commitment,” Collon said. We are also thrilled to have backing from a new group of strategic investors from the US, the Middle East, and Africa, some of whom are making their first African tech investment.
In the last year, numerous prominent African funds have arisen, despite fund managers’ difficulties obtaining money as limited partners evaluate strategy and track record. Partech’s African fund is one of them. Norrsken22, Al Mada, and Novastar’s Africa People + Planet are other big funds. Enza Capital, Equator, Knife Capital, and the E3 Low Carbon Economy Fund for Africa (E3LCEF) have also completed large funds, indicating investor interest in Africa’s development.
