Money and Markets

R3 billion in a new fund is looking for African unicorns – with a heavy focus on South Africa

Business Insider SA
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  • Founders of unicorn tech companies are shopping for the next billion-dollar contenders, in Africa.
  • Their fund, set up by the Norrsken Foundation, is already halfway to raising a target of some R3 billion.
  • The scope will be continent-wide, but two of the fund's four companies will be in South Africa, and both board and investment team are heavy with South Africans.
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Founders involved in previous unicorns – companies that have hit a valuation of $1 billion or more – are looking for new African unicorn contenders in which to invest a fund due to be worth more than R3 billion.

And although they are shopping throughout the continent, everything points to a heavy focus on South Africa.

Those that attract their attention can expect an injection of capital, but also hands-on help from the people behind companies such as Skype, Klarna, Mojang, iZettle, Flutterwave, and Delivery Hero, who have put up some of the fund's initial cash.

The fund is being set up by Norrsken, a Swedish VC created by Niklas Adalberth, a co-founder of the buy-now-pay-later company Klarna. It is known as the Norrsken22 African Tech Growth Fund.

It has closed on $110 million (about R1.7 billion) of funding, and says it could ultimately facilitate $2 billion worth of investment, through co-investments with major VC players.

Norrsken22 wants to spend that money in Africa because it believes the continent is in a position where there is relatively easy access to early-stage capital, but little money to scale up promising companies. It hopes to make a profit with that approach, while also proving the investment case for Africa.

It has promised to invest not only in A-round fundraising, but to put significant amounts into B and C rounds.

South Africa features heavily in early planning, with two of its four offices due to be in South Africa, one each in Cape Town and Johannesburg. The other two are planned for Lagos and Nairobi.

The Norrsken22 investment team will feature Natalie Kolbe, a South African private equity specialist, and those on its board includes South Africa's Phuthuma Nhleko, of MTN fame, and Nonkululeko Nyembezi, the chairperson of the JSE.

Of the 400 companies already on its radar, most are in South Africa, Kenya, and Nigeria, the fund told the Financial Times.

The fund says it is looking for "relevant, disruptive, scalable and tech-enabled business models" in fintech, edtech, medtech, and market enablement.

(Compiled by Phillip de Wet)

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