In a significant development for growth-stage investment in Africa, Norrsken22, a Pan-African venture capital firm, has successfully closed its debut fund, surpassing its initial target and raising a total of $205 million. This achievement underscores the strong interest from institutional investors in supporting African startups at a critical juncture in their growth journey.
Established by five individuals with extensive experience in venture capital and private equity, Norrsken22 boasts a distinguished team of founders and partners. The firm’s leadership includes founding partners Niklas Adalberth and Hans Otterling, along with managing partner Natalie Kolbe and general partners Ngetha Waithaka and Lexi Novitske. Operating for nearly two years, Norrsken22 has established operational teams in Nigeria, South Africa, Kenya, and Ghana.
The Norrsken22 African Tech Growth Fund was launched in January the previous year and achieved its first close at $110 million. Notably, approximately 59% of the funding came from a consortium of 30 unicorn founders worldwide, including prominent figures like Olugbenga Agboola, CEO of Flutterwave, Niklas Zennström, co-founder of Skype, Jacob de Geer, co-founder of iZettle, and Niklas Östberg, co-founder of Delivery Hero.
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The timing of Norrsken22’s fundraising coincided with a surge in capital inflow into the tech sector. Initially, the firm intended to reach its final close by the end of 2022, engaging in discussions with development finance institutions (DFIs) and family offices, which are typically necessary for raising substantial funds in Africa. However, the global tech investment landscape experienced a pullback, affecting fundraising efforts across the board, including from institutional investors. In 2022, venture capital activity in Africa amounted to $5 billion to $6 billion. In 2023, the figure has decreased to a range between $2.5 billion and $3.4 billion, reflecting the overall decline in VC activity.
Despite the prevailing challenges, Norrsken22 successfully achieved its final close, albeit with a one-year delay. This accomplishment is significant given the obstacles faced by many VC firms, both local and global, in raising or closing their funds. The oversubscription of the growth fund is a remarkable feat, attributed by managing partner Kolbe to a renewed fundraising momentum observed in early 2023. The extensive experience of Norrsken22’s founding team in African investments, combined with the backing of other limited partners, particularly founders of unicorn startups, played a crucial role in garnering interest and support for the fund.
Following the initial fund close, which received support from SEB Pension Foundation and a few family offices, Norrsken22 attracted new limited partners such as British International Investment (BII), International Finance Corporation (IFC), U.S. International Development Finance Corporation (DFC), Standard Bank, and Norfund.
Investment Focus on Series A and B Rounds
In the African investment landscape, international funds typically lead most large deals, while local investors primarily focus on pre-seed to Series A rounds with smaller to medium-sized funds. Large Africa-focused funds like Norrsken22 aim to bridge the gap between growth and late-stage investments. Around 50% of Norrsken22’s capital will be allocated to building its portfolio with Series A and B companies, with the remainder reserved for follow-on investments, primarily in the B and C rounds, according to Kolbe.
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The firm’s investment focus centers on entrepreneurs developing fintech, edtech, medtech (health tech), and market-enabling solutions that promise strong returns and positive impacts across Africa. To date, Norrsken22 has made five investments, including TymeBank, Sabi, Smile Identity, Autochek, and Shara.
Norrsken22’s objective is to invest in approximately 20 startups, with an average investment ticket size of around $10 million. However, in select portfolio companies, it may go as high as $16 million for follow-on rounds, as discussed by the partners in a previous interview.
Strategic Exits
Like several other growth-stage firms, Norrsken22 is keen on preparing its portfolio companies for successful exits. The firm conducts rigorous evaluations of potential exit scenarios, including identifying potential buyers and assessing valuations at the end of the investment period. According to Kolbe, this diligence is crucial, and the firm has declined investments where a compelling exit case was not evident.
Norrsken22 is exploring exit opportunities through international strategic buyers, consolidation with local industry leaders, and potential acquisitions by large multinational corporations in Africa. These corporations often seek innovation by acquiring tech businesses, which can be integrated into their operations or operate as separate entities under a different brand. Norrsken22’s debut fund is supported by an advisory council comprising business leaders in banking, telecommunications, agriculture, and real estate.
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