Novastar Ventures has closed $108 million Novastar Ventures Africa Fund II (NVAF II) to targeting businesses where positive social impact for low-income households is a natural byproduct of their commercial success.
Novastar Ventures’ first fund was limited to East Africa but the second fund will target both East and West Africa from its offices in Nairobi and Lagos. Novastar manages more than $200 million of capital and backs start-ups that widen access, improve quality, and lower cost for the mass market in these emerging economies.
Co-founder and Managing Partner Andrew Carruthers notes: “The COVID-19 pandemic has obviously compounded the significant challenges for entrepreneurs building businesses in our territories. The strongest entrepreneurs will seize the opportunities that arise during the crisis, and we expect to see more entrepreneurial talent released from ‘safe jobs’ that are no longer safe.”
Novastar’s first fund of $80 million together with a $12.5 million co-investment facility has backed 15 companies, each reflecting the VC’s focus on mass-market scale potential, business model innovation and outstanding entrepreneurial leadership.
NVAF II targets new early and growth-stage businesses in East and West Africa and has has already led or co-led financing rounds in three companies:
mPharma, a technology-driven healthcare company creating efficiencies in the supply chain for qualitydrugs through its Vendor Managed Inventory (VMI) model, driving down costs to patients through its rapidly growing retail channels and partnerships. mPharma now operates in Ghana, Nigeria, Kenya, Zimbabwe and Zambia.
Sure Chill, a platform cooling technology company that enables refrigerators to maintain a constant temperature without constant power supply. The company is adapting its technology to supply a wide range of off-grid and weak-grid applications in Africa.
Metro Africa Xpress (MAX), a Nigerian-based on-demand motorcycle ride sharing and logistics business, making mobility and transportation safe, affordable, accessible and sustainable.
NVAF II benefited from the strong backing of the primary institutional investors in Novastar’s maiden venture fund who matched or increased their commitments. Leading private asset manager’s AXA Impact Fund II joined with several private family offices and leading European development finance institutions
CDC Group, European Investment Bank, Dutch Good Growth Fund, FMO, Proparco, Norfund and SIFEM to capitalize the fund.
Novastar manages more than $200 million of capital, but it doesn’t look at itself primarily as a fund manager. It’s focus and real interest in its work is partnering with high-capacity, ambitious entrepreneurs to help them bring their ideas to life and multiply their impact.
“We are grateful for our investing partners who have helped us capitalize NVAF II at the beginning of this difficult period,” said Co-founder and Managing Partner Steve Beck. “Many of the world’s most innovative, successful businesses today were born out of recessions and crises of various kinds. Our investment strategy is well suited to this environment. We back breakthrough businesses that serve the common good; ones that will have staying power and profoundly positive impact precisely because they are innovating ways to address basic needs and the biggest challenges in our region.”