Ventures Platform has successfully raised an impressive $83 million for its second fund after exceeding its fundraising target. This Pan-African venture capital firm is broadening its focus beyond Nigeria while adapting to a more competitive investment climate.
The firm aims to support early-stage entrepreneurs across various sectors such as fintech, healthcare, and SaaS, focusing on areas where technology can meet critical needs and foster sustainable businesses, according to Kola Aina, the founding partner.
Artificial Intelligence (AI) plays a vital role in their investment strategy.
“We are particularly focused on how AI can revolutionize the economics of servicing African markets,” Aina explained, highlighting its potential to lower service delivery costs and mitigate labor shortages. “For us, the true value of AI lies in its ability to fundamentally alter cost structures, business models, or market opportunities,” he added.
Ventures Platform, based in Nigeria, had previously secured $46 million for its first fund in 2022, which primarily targeted pre-seed and seed investments.
“Our initial fund demonstrated that our model for investing in early-stage African ventures could be viable on an institutional scale and set the groundwork for Fund II,” Aina stated.
With this new, larger fund, Ventures Platform is extending its geographical reach.
The firm is currently backing early-stage companies in markets outside Nigeria, including Kenya, South Africa, and Egypt, with investment amounts reaching up to $3 million. They anticipate deploying this capital over the next three to four years.
“We are especially keen on opportunities where technology can improve access to essential goods and services, address vital infrastructure issues, and create entirely new markets,” Aina remarked.
The fundraising endeavor took approximately 18 months, with Aina noting that the current environment is more “selective” compared to the time of their first fundraise.
“Limited partners (LPs) are posing more challenging questions about performance, portfolio management, liquidity, and differentiation,” Aina mentioned.
He observed that the market remains cautious, as LPs are seeking more evidence that fund managers can generate tangible returns from their portfolios. The flow of capital is no longer seen as limitless, especially after many LPs experienced setbacks during a previous venture downturn.
“This leads to a heightened focus on capital efficiency, solid fundamentals, governance, regulatory compliance, and creating sustainable businesses through various funding cycles,” he explained. “It’s clearer now that building valuable companies and achieving venture returns goes beyond merely raising successive rounds of funding.”
In 2023, startups across Africa have secured nearly $930 million through over 200 deals, compared to $1.16 billion raised in 2022 through 447 deals.
As noted previously, the current venture landscape resembles a barbell, where LPs are allocating funds primarily to a select few established firms and to emerging managers with a reliable track record.
“Three years ago, there was significant intrigue about African investment opportunities. Now, LPs are looking for concrete proof,” Aina said, emphasizing that this trend is beneficial for the industry.
“The dialogue has shifted from ‘Why Africa?’ to ‘Why are you the right choice and how will you achieve returns?’” he noted, pointing out that mere pan-African status is no longer a compelling strategy. LPs are increasingly interested in understanding how funds will access top talent, navigate regional markets, and establish their competitive edge. “Combining local expertise with global connectivity is becoming crucial as the ecosystem evolves,” he stated.
According to Aina, the firm’s distinctive advantage lies in the blend of local insight and global reach. The current generation of founders and managers has experienced both capital abundance and scarcity. Hence, it is essential to grasp the institutional challenges that founders face while linking companies to regional and international networks as they grow.
This compelling message appears to have resonated with existing investors, as 70% of Fund I’s LPs have committed to Fund II. Notable backers include the European Bank for Reconstruction and Development, Norway’s Norfund, and Ashesi University Foundation in Ghana.
“We value this loyalty greatly,” he concluded.
