Partech closed its second fund for Africa, Partech Africa II, at €280M ($300M+), just one year after the first closed.
At this size, Partech Africawhich was originally aimed at 230 million euros before fundraising efforts begin, it cements its position as the largest fund dedicated to African startups.
In a context of global VCs and institutional investors pulling out of Africa, Partech Africa’s recent fund closure is significant. The continent saw a marked drop in investor activity, with a 50% drop in 2023 compared to the previous year, as highlighted in a Partech report. This retreat, influenced by global economic changes and local challenges, translated into reduced venture capital inflows for African startups, totaling between $2.9 billion and $4.1 billion last year, from $4.6 billion to $6.5 billion dollars in 2022.
The impact was felt across all investment stages, with early-stage deals down 33% and growth-stage deals down 39%, according to Partech’s findings. While Partech Africa, known to lead rounds, cannot single-handedly reverse this trend, its focus on Series to Series C rounds can provide some stability and support to startups navigating these challenging times.
Partech Africa wants to support founders at various stages of their journey, from early to later rounds by leveraging its position in the ecosystem, the firm’s general partners announced. “The ability to anchor rounds at all stages from seed to early growth is more critical than ever.” Cyril Collon he said in a statement.
Meanwhile, in an email to TechCrunch, Tidjane Deme says the firm’s expanding VC team will enable it to efficiently deploy capital and offer assistance to portfolio companies at these stages. With offices in Dakar, Nairobi and Dubai, Partech Africa has recently established a presence in Lagos, where it is actively recruiting to work closely with startups in the region, highlighting the city’s importance as a third of the company’s portfolio companies are based there. However, it clarified that the company will use most of its second capital between its Series A and B rounds.
Among the investments from its second fund is Revio, a South African payments orchestration platform, where Partech Africa co-led the seed round with global fintech fund QED. In addition, the company has made undisclosed investments in an Egyptian proptech and a Senegalese e-commerce startup. Partech Africa plans to back more than 20 companies, with initial investments ranging from $1 million to $15 million, he revealed.
The Dakar-based venture capital firm, which has backed 17 startups in its first fund, is prioritizing sectors such as fintech, agritech, health tech, retail, FMCG and agency banking, which are vital for Africa’s employment and economic activity. Notable investments include Wave, TradeDepot, Yoco and Reliance.
“Companies from the first fund can benefit from subsequent funds from the first fund but not from the second,” Deme commented on the company’s growth strategy. “We continue to support Fund 1 companies on their journey with capital and in many other ways.”
More of the fund’s strategy was covered during its first close last February.
Partech Africa’s investor base reflects a wide range of profiles. During the first close, development finance institutions, commercial investors, African funds of funds and family offices were some of its limited partners. For its second close, it attracted participation from US and Middle East pension funds, sovereign wealth funds, Dubai Future District Fund (DFDF) and African Reinsurance Corporation (Africa Re).
“We are grateful for the support and commitment of our investors: almost all Fund I investors reinvested and some more than doubled their commitment,” noted Collon. “We are also honored to receive backing from a new set of strategic investors from the US, the Middle East and Africa, and for some of whom, this marks their first commitment to African technology.”
Partech’s African fund is among several notable funds to emerge on the continent in the past year, despite challenges for fund managers in raising capital as limited partners scrutinize strategy and track record. Other large-cap funds include Norrsken22, Al Mada and Novastar’s Africa People + Planet. In addition, firms such as Enza Capital, Equator, Knife Capital and E3 Low Carbon Economy Fund for Africa (E3LCEF) also closed several large funds, reflecting the continued interest of investors in Africa’s growth potential.
