A $10 million fund for pre- Series-A stage African startups has been launched by Zedcrest Capital, a company that is best known for its investments in the debt and equity capital markets but has recently begun experimenting with venture capital investments. According to Zedcrest Financial, the fund, branded “Knight Fund,” aims to provide last-ditch follow-on capital access to local funding necessary to assist entrepreneurs consolidate on existing operations, grow, and expand.
According to a statement from the organisation, “The Knight Fund is motivated by the present slowdown in startup investment for African founders as global investors withdraw to concentrate on their main markets.”
Zedcrest Capital will support businesses that are having difficulty raising a Series A round or would like to fund a bridge round before approaching investors for a venture round through the Knight Fund. Ventures at Zedcrest, a fund for extremely early stage investments, focuses on pre-seed and seed startups. With money from this fund, it has backed more than 20 African startups, including TalentQL, Indicina, Simpu, Julaya, and Thndr.
“We’re still investing in seed from our first fund but we are also going to slow down because the biggest opportunity right now will be in this pre-Series A,” said Adedayo Amzat, founder and CEO of Zedcrest Capital. “So now, we are dedicating $10 million to this category of slightly more mature businesses going through a rough patch because the market is very tight.”
According to the fund, as international investors return to their pre-COVID investment deployment levels, they will have a worsening effect on venture funding in the second half of this year as they take longer to finalise deals and prioritise supporting businesses with robust unit economics.
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“Most investors are not writing checks right now. And for those writing, they’re going back to 2018 times where they take months for due diligence. So if a startup has a short runway, you need someone who can give you money and will not take five months to make a decision,” added Amzat.
Since it spun out this fund a few months ago, Zedcrest Capital has invested in three firms in pre-Series A stages, writing checks ranging from $200,000 to $500,000.
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Charles Rapulu Udoh
Charles Rapulu Udoh is a Lagos-based lawyer, who has several years of experience working in Africa’s burgeoning tech startup industry. He has closed multi-million dollar deals bordering on venture capital, private equity, intellectual property (trademark, patent or design, etc.), mergers and acquisitions, in countries such as in the Delaware, New York, UK, Singapore, British Virgin Islands, South Africa, Nigeria etc. He’s also a corporate governance and cross-border data privacy and tax expert.
As an award-winning writer and researcher, he is passionate about telling the African startup story, and is one of the continent’s pioneers in this regard. You can book a session and speak with him using the link: https://insightsbyexperts.com/view_expert/charles-rapulu-udoh