Despite the ongoing funding winter, venture capital activity in Africa has exhibited resilience in the past six months, with major firms continuing to support startups on the continent by closing their funds.
In a recent development, TLcom Capital, an African VC firm with offices in Lagos and Nairobi focusing on early-stage startups, successfully concluded fundraising for its second fund, TIDE Africa Fund II, raising a total of $154 million. This final close positions the firm as the largest investor in Africa across seed and Series A stages.
The oversubscribed fund, targeting an initial close of $150 million, attracted over 20 limited partners, including notable investors like the European Investment Bank (EIB), Visa Foundation, Bertelsmann, and AfricaGrow (a joint venture between Allianz and DEG Impact).
This announcement comes after two years and a few months since TLcom Capital first closed its second fund at $70 million, matching the size of its first fund, TIDE Africa Fund I. Despite the extended fundraising period due to the global slowdown affecting VC and startups, the firm’s managing partner Maurizio Caio cited several positives in an interview with TechCrunch.
TLcom Capital managed to close its second fund in a shorter timeframe than the first fund, even though it was twice the size. This success is attributed to the increasing understanding and acceptance of venture capital as a legitimate asset class among limited partners in Africa. Additionally, an impactful portfolio of companies following the firm’s investment strategy was crucial in gaining investor confidence and support.
Unlike other VC firms that transition from backing startups in pre-seed and seed stages to later-stage investments with subsequent funds, TLcom Capital maintains a consistent focus on early-stage opportunities, particularly at seed and Series A levels. The investor also considers opportunistic deals at growth and later stages while prioritizing early-stage investments.
TLcom Capital’s strategy involves backing founders at the pre-seed stage and investing in companies showing potential for 10-20x returns to ensure profitable outcomes. The firm emphasizes backing repeat founders like Sim Shagaya, Etop Ikpe, and Grant Brooke to leverage their experience and ensure future success.
By expanding its portfolio to include six companies from its new fund, TLcom Capital has made initial investments ranging from $1 million to $3 million. The firm has also diversified its investments into Egypt and South Africa, alongside its traditional focus on Nigeria and Kenya.
With a multi-sector approach, TLcom Capital and other notable VC firms have raised substantial funds to support African startups across various stages of growth, highlighting the importance of exit opportunities and tangible returns for LPs in driving the African tech ecosystem forward.
As the African tech ecosystem continues to evolve, the focus shifts towards generating valuable returns from investments and attracting global capital to create significant value through technology in the region.
