Nairobi-based venture capital fund, Savannah Fund, is back with a new $25m fund for African startups. This is the second fund of the 9-year-old company headquartered in Ebene, Mauritius, and which pivoted from an accelerator in 2016. Backing the venture capital firm’s latest fund are the International Finance Corporation (IFC), with Women’s Finance Initiative (WeFi), U.S investor Tim Draper via his VC fund, Draper Associates and Visa Forsten, co-founder of Tencent-owned Supercell, joining.
What Startups Is The Fund Looking To Invest In?
- The fund’s primary markets are East, West and Southern Africa. The fund had previously invested in South Africa’s Aerobotics, Kenya’s Sendy, Eneza Education, Copia; Nigeria’s Lidya, ACE. However, a majority of its investments are in Southern and East Africa.
- Sector-wise, Savannah Fund invests in startups no matter their sectors; but its previous investments fall within the following sectors: logistics, agritech, drone tech, foodtech, cloud computing, fintech, ecommerce, gaming, healthtech, data analytics, regtech, etc.
- The fund is also looking for startups at their seed and Series A rounds.
- It doesn’t matter where the founder is located. What is important, according to Savannah Fund, is that the founder is building a startup with an African customer base or is selling something uniquely African to the world. The fund had previously invested in a company with traction in Africa run by a Zimbabwean living in Australia.
“At Savannah Fund we are interested in the 3rd High Growth (and consequentially, high risk) type of entrepreneurship which matches up well with technology (web and mobile) sector given the ability to scale out fast and hence achieve rapid growth. It also means we use equity and very little debt initially to get the business going. We bet on the founder and aim to be their business partner, connecting them to both our local and Silicon Valley mentor and investment community who have experience and focus 100% on tech. That’s why for instance, we use a coding test as our filter in the absence of products in the accelerator to ensure that one of the founders is technically outstanding to carry the startup through the long journey and likely many pivots required in iterating the product. Strong technical ability also is a good prerequisite of being able to understand metrics and be coachable in other areas of business- you hope the other founder has these qualities inc. high risk appetite and ability to sell and hire future employees. The founders typically are very “mission driven”, this is very different to impact investors who focus on specific do-gooder goals,” said Mbwana Alliy Founder and Managing Partner at Savannah Fund.
- Savannah Fund founders also look most likely to invest in startups which have taken time to build long standing relationships with them.
“An investment in a company is like a marriage, its not a one time deal and then we walk away, some companies we could be working with for 5–10 years. So building a relationship matters, it allows us both to decide if it might be a good idea to work together,” Mbwana said.
How Much Does Savannah Fund Invest In A Startup?
- The fund intends to spend as little as $50,000 in pre-seed, but first check sizes will typically range from $150,000 to 250,000. The firm’s ability to participate in subsequent rounds, which would most likely require greater sums, will be determined by whether or not it is a lead investor.
Read also: Egyptian Fintech API Startup Dayra Raises $3 million In Pre-seed, Backed By Y Combinator
How Can Startups Apply?
For startups interested in applying, it is better to do so by pitching the partners, Mbwana Alliy and Paul Bragiel. Tommy Chia, however, concentrates on investments in Nigeria and South Africa. Alternatively, visit the fund’s website here.
“Generally, those in East Africa around the iHub community have a better visibility to me. If you are startup in Nigeria or South Africa , its just that much harder to build a relationship, but still possible as we showed in our first deal with the company all the way in Australia. We do travel and we are building strong links with other investors across the continent who share in our philosophy and approach to serving tech startups,” Mbwana said.
Charles Rapulu Udoh
Charles Rapulu Udoh is a Lagos-based lawyer who has advised startups across Africa on issues such as startup funding (Venture Capital, Debt financing, private equity, angel investing etc), taxation, strategies, etc. He also has special focus on the protection of business or brands’ intellectual property rights ( such as trademark, patent or design) across Africa and other foreign jurisdictions.
He is well versed on issues of ESG (sustainability), media and entertainment law, corporate finance and governance.
He is also an award-winning writer