The Pan-African fund launched via a partnership between AfricInvest and a European-born but global-focused venture capital firm has achieved a final close.
Last week, Cathay Innovation said it was aiming to raise 1 billion for its third fund to invest in growth and later-stage companies across Europe, North America, Latin America and Asia. The fund launched two sister entities within three months.
Cathay Innovation carries a different approach in Africa. Unlike other regions where the firm invests from its multistage fund and ventures on its own, for Africa, it partnered with the Tunisian-based AfricInvest in 2019 to back promising early to growth-stage startups on the continent.
Private equity is one of the asset classes handled by AfricInvest. The firm has raised more than $2 billion over the years. There are over 200 portfolio companies, of which 106 have left. Four years ago, when firms struck the partnership and formed CAIF, Cathay Innovation sought a track record like this.
The fund was announced in the year 2019. It wanted to raise $168 million for Series A to Series C investments. The fund's final close suggests that the plans didn't go as planned, but Denis Barrier said that CAIF adjusted its expectations and settled on raising 100 million. We exceeded the target in terms of raising money.
The chief executive said that CAIF's support of early-stage founders allowed the firm to change its strategy and reiterate its initial conviction of making seed to Series A deals. It has made some bets later on. Up to 1 million in seed stage and between 1 million and 10 million in growth stage businesses are invested by the firm.
In order to become regional leaders before they pursue global ambitions, the firm backs startup with strong unique selling proposition (USPs) and helps them to do so, according to a partner at AfricInvest. The partner narrated it step by step. Africa is a large market. The importance of firms like CAIF with resources on the ground cannot be overstated. Beyond the continental borders, using Cathay Innovation's network is crucial.
Oussaifi said on the call that they worked together to invest in Africa. AfricanInvest has a presence on the ground in Africa. We work with Cathay to help these companies expand beyond Africa, go to other emerging markets, and work with their expertise and know-how.
Examples of this process are Aerobotics and WhereIsMy Transport. Both companies expanded to the U.S. and Mexico due to their success in their home countries. Heetch, a ride-sharing startup based in Paris, is one of the companies that has been funded by CAIF. Heetch was supported by CAIF after moving into Africa.
The fund co-led its recent round of funding for seven other startups. They represent a number of sectors that the CAIF is interested in.
Our goal was to benefit 100 million users in Africa. According to Oussaifi, almost 150 million users have used our products or services.
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More than $5 billion was invested in Africa last year, more than in the previous two years. Global funds have been the main catalysts but take nothing away from large Pan-African funds, who have also pulled their weight by raising nearly $800 million in available capital between themselves.
The final close puts CAIF in a good position to double down on its efforts to focus on innovative andScalable post revenue ventures. SeveralLPs invested in this fund, including BIO, EIB, Proparco, SIFEM, AfricaGrow, and Triodos Investment Management DFIs, multinational corporations and HNIs from all over Europe, Africa and the Middle East were involved.
CAIF is like many other funds in this year's first half, announcing its fund's close. Barrier said that the firm sees companies with good metrics in their portfolio. Even if there is a dip in valuation, the underlying principles of innovation in the next ten years are still more true than ever. We will be very sure of what we are doing. We could be concerned if our portfolio companies stopped growing. It isn't the case.
Oussaifi thinks that the venture capital downturn is a short-term event in Africa. startups will continue to raise money to grow and scale if the tech industry continues to evolve and be more diverse, he said.
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