LoftyInc Capital, a pan-African venture capital firm, today announced the launch of its third fund – LoftyInc Afropreneurs Fund 3 – at $ 10 million for tech startups in Africa.
The company hit the first close of $ 5.5 million. Some of the vehicle’s sponsors include those of its second fund, FBNQuest Funds, Green Investment Club syndicates, HNIs from multinationals like Google, Facebook and ExxonMobil; and CEO of Andela Jeremy Johnson, among others.
So far, LoftyInc has issued checks to over 20 startups since it started raising money for the fund. They cover various industries such as e-commerce, fintech, healthcare, logistics and media in different regions of Africa and beyond..
In French-speaking Africa, the company has invested in Afrikrea and Star News Mobile. Then at Omnibiz, RXAll, Sudo Africa, Tech Advance, Aladdin, Flex Finance, Star Kitchens Group and EPump in West Africa.
For LoftyInc’s portfolio in North Africa, there are Odiggo, Illa, Tagaddod and Instadiet. Akiba Digital, Beamm and Zazu Africa make up LoftyInc’s portfolio in South Africa, while Cashback and Dash are the funded startups in East Africa. LoftyInc also has diaspora interests in OjaExpress and FitMatch.
LoftyInc manages three funds simultaneously. The second fund, which is its first formal venture capital fund, is largely focused on Nigeria. On the other hand, this third fund follows the thesis of LoftyInc’s first fund: investing in startups in different markets and sectors in Africa and in the diaspora.
The fund says it wants to take big bets in markets outside the Big Four – Nigeria, Kenya, South Africa and Egypt.
Operation of three funds
A month ago, TechCrunch covered one of Africa’s largest angel investors, Olumide Soyombo. He is one of the few giants of a game that features LoftyInc founder and general partner Idris Bello.
Bello likes to describe his 12-year adventure in tech and entrepreneurship as an “afrourreneurship journey.”. ” While studying business in the United States, he realized that the next wave of innovation that Africa as a continent needed rested on the shoulders of promising founders..
With that in mind, Bello began LoftyInc allied partners alongside other entrepreneurs as a business development company. This created a technology hub and venture capital accelerator called Wennovation Hub as well as a venture capital arm called LoftyInc Capital.
In 2012, the company launched the first fund – LoftyInc Afropreneurs Fund 1 – as a pre-seed investment vehicle. The fund acts more like a syndicate or group of angel investors whose investors include senior executives in key sectors across Africa.
More than 180 business angels invest through the first fund and have collectively invest over $ 4 million in over 40 startups across the continent. Some big names of Nigerian and Egyptian descent include Flutterwave (pre-seed) unicorn, Soonicorn Andela, Trella, Chefaa and Koniku.
Five years later, as a founding partner, Bello teamed up with longtime advisor Marsha Wulff, an early investor in healthcare technology company Teladoc. They launched the second fund, LoftyInc Afropreneurs 2 Fund, alongside Michael Oluwagbemi, also general partner of the firm.
From 2017 to 2020, LoftyInc issued checks worth over $ 1.2 million in nine rounds to six Nigerian startups – Printivo, RelianceHMO, Epump, YouVerify, Shyft Power Solutions and Flutterwave (pre-series A).
Flutterwave is the first release from LoftyInc, which Bello says has returned 3x to its records. It was this successful exit that laid the foundations for the third fund.
“When we left our stake in Flutterwave in February, our LPs wanted us to raise and build another fund because we were making returns for them. At first we wanted to create a fund of $ 2.5 million, but after asking LPs it grew to $ 4 million. Then ultimately we only decided to make $ 10 million, so we can invest in more startups, ”Bello told TechCrunch.
But when you look at Bello’s status in the African tech ecosystem and what similar Africa-focused funds are raising these days, one wonders why the investor isn’t raising more..
His response to this:
“I always say this – my approach is very different. I’m pretty organic which is evident in the way we went from a bunch of angels to LPs. I feel once you get up to $ 50-100 million, your problem becomes a good rollout, especially in Africa. And what I do is build a smaller base at a pyramid, so when I raise a big fund, it won’t be a problem to deploy the funds.
Another point he raised concerns the sponsors involved. Most of the company’s LPs in this third fund hold managerial and managerial positions in banks and other multinationals. Bello argues that if Fund 3 can deliver on its promise of generating fantastic returns for these individual LPs, it will be obvious to integrate the institutions they work with for a larger fund..
“We want to build an ecosystem of African investors. After that, we will start to set up the institutions to also participate in making investments.
LoftyInc has a robust transaction flow and views about 30 bridges per week, according to Bello. He says the fund receives so much flow because the founders of portfolio startups are the most important source of the company’s proprietary deals.. And that’s what he says sets LoftyInc apart from other venture capitalists.
For example, in a brief conversation with TechCrunch, Andela CEO Jeremy Johnson mentioned that before anyone knew about her startup, LoftyInc had already backed her.. And for him, it only makes sense to do the same when looking for deals and investing in the fund.
In addition, the company, through its first fund, also has a large base of investors of African descent who live inside and outside the continent. Per Bello, this network of angels also serves as prospectors for the company.
“We typically invest first of all major investors, hold hands with new founders, seek their initial clients from our large portfolio of over 65 African startups and our extensive network of African-based angel investors and sponsorship companies..
“We also provide meaningful presentations to regulators, partners, mentors, top employees and experienced directors.. In addition, the founders want us in their transactions because they have seen us attract early stage and late stage investors in past ventures. “
In terms of what LoftyInc looks for in the companies it invests in, there is a bias towards those looking for a large market with little to no competition, a product that users love and execution.
As with most venture capital firms, LoftyInc claims to be industry independent. Nevertheless, there is some affinity with startups playing in the IoT, fintech, and healthtech space, Bello said.
LoftyInc’s first fund, principally supported by angel investors, is most bullish at the pre-seed stage. This year alone, the group has entered into more than 50 pre-seed deals. For others, the focus is on the starting offers for Series A with an average ticket of $ 250,000.
While LoftyInc’s target for Fund 3 is $ 10 million, Bello told TechCrunch that the company hopes to achieve a final close above that figure before the end of the fourth quarter of 2021..