Nairobi-based VC Fund Manager Novastar Ventures has raised $72.5 million for its second fund, with a target size of $120 million to cover both East and West Africa and has added a presence in Lagos, Nigeria.
Novastar backs early and growth stage businesses led by entrepreneurs with the capability and ambition to transform markets and sectors. Novastar raised the $72.5 million in commitments from existing investors CDC Group, European Investment Bank, Dutch Good Growth Fund and FMO with participation from new investor AXA Impact Fund II joining.
According to Co-founder and Managing Partner Steve Beck: “Our vision is to see sub-Saharan Africa populated with a growing number of high-capacity entrepreneurs building innovative businesses that serve the common good. We aim to demonstrate that commercial venture investing can generate both large-scale social benefits for the mass market and attractive financial returns for investors, thereby unlocking more capital to fuel entrepreneurship in the region.”
Novastar II will invest as little as $250,000 in an unproven business model addressing a big problem in a big market to more than $6 million through multiple capital rounds.
Novastar’s first fund of $80 million plus a $10 million co-investment facility has backed 15 companies, each reflecting the Fund’s focus on mass-market scale potential, business model innovation and outstanding entrepreneurial leadership. While Fund I continues to invest follow-on capital into the successful businesses in its portfolio, Novastar II targets new breakthrough businesses in East and Anglophone West Africa.
Explaining the expansion to Lagos, Novastar co-founder and Managing Partner Andrew Carruthers said, “We have seen how flexible long-term capital, coupled with local knowledge and innovative business models has catalyzed rapid growth in some truly exceptional enterprises in East Africa, thereby attracting substantial investment from a new category of investors. By establishing a presence in Lagos, with its concentration of talented entrepreneurs addressing a vast market, we want to be the spark to a similar cohort of innovative businesses generating social and economic value for the mass market, attracting substantial investment into West Africa as well.”