LoftyInc Capital launches a third fund at $10M to support a wider range of African startups
LoftyInc Capital is a pan-African venture capital firm that launched today its third fund LoftyInc Africapreneurs Fund 3, valued at $10 million, for African tech startups.
The first close was $5.5 million. Limited partners include syndicates from The Green Investment Club, FBNQuest Funds, syndicates of multinationals such as Google, Facebook and ExxonMobil, as well Asela CEO Jeremy Johnson.
Since it started raising funds for the fund, LoftyInc a written checks to more than 20 startups. They cover a range of industries such as e-commerce and fintech as well as logistics and media in different parts of Africa.
Francophone Africa: The company invested in Afrikrea, Star News Mobile and Sudo Africa. Next, in Omnibiz and RXAll.
Odiggo and Illa are the North African portfolios of LoftyIncs. Tagaddod and Instadiet are also available. LoftyIncs portfolio for South Africa includes Beamm, Zazu Africa, and Akiba Digital. East Africa startups are funded by Cashback and Dash. LoftyInc also holds Diasporan interests with OjaExpress, FitMatch and FitMatch.
LoftyInc manages three funds at once. The second fund is the company's first formal VC fund. It is primarily focused on Nigeria. LoftyInc's first fund was focused on Nigeria. This third fund, however, follows LoftyIncs thesis: investing in startups in different markets and sectors across Africa and the Diaspora.
According to the fund, it is willing to place large bets on markets other than the Big Four Nigerian, Kenyan, South Africa and Egypt.
Three funds
TechCrunch featured Olumide Soyombo, one of Africa's most prominent angel investors, a month ago. He is one of few giants in a game with LoftyInc founder Idris Bello as general partner.
Bello describes his 12-year journey into technology and entrepreneurship in the United States as an Afropreneurship Journey. He realized that Africa needed the next wave in innovation.
Bello, along with other entrepreneurs, founded LoftyInc Allied Partners as an enterprise development company. It created a technology hub, venture accelerator called Wennovation Hub, and also the venture arm LoftyInc Capital.
The firm created the LoftyInc Afropreneurs fund 1 in 2012 as its pre-seed stage capital vehicle. The fund acts more like an angel group or a syndicate, with investors including senior executives from key African industries.
More than 180 business angels have invested via the first fund.
Collectively
More than $4 million was invested in 40+ startups on the continent
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There are many big names that hail from Egypt and Nigeria, including the unicorn Flutterwave (preseed), Soonicorn Andela and Trella. Chefaa and Koniku are also among them.
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Bello, five years later, was the founding partner. He teamed up again with Marsha Wulff (a long-time advisor) who was an early investor in Teladoc's healthtech company Teladoc. Along with Michael Oluwagbemi who acts as general partner, they launched LoftyInc Afropreneurs Fund 2.
LoftyInc issued checks totaling over $1.2 Million in nine rounds between 2017 and 2020 to six Nigerian startups Printivo (pre-Series A), RelianceHMO. Epump. Shyft Energy Solutions. Flutterwave.
LoftyInc's first exit was Flutterwave, which Bello stated returned 3x its LPs. This exit was the catalyst for the creation of the third fund.
Our LPs asked us to raise money and create another fund after we sold our Flutterwave stake. They were pleased with the returns we had made. We initially wanted to raise $2.5 million, but after contacting LPs, it rose up to $4 million. Bello told TechCrunch that eventually, we decided to make it $10million to allow us to invest in more startups.
However, when one looks at Bellos position in the African tech ecosystem as well as what other Africa-focused funds are currently raising money, it is easy to wonder why the investor hasn't raised more.
His response?
This is what I believe, and it's why my approach is so different. I am very organic, which is evident in the way we went from an angel group to LPs. My belief is that once you have $50m to $100m, the problem can be solved. This is especially true in Africa. I'm trying to build a smaller pyramid base so that when I raise a large fund, it wont pose a problem in deploying the funds.
He also mentions the limited partners. The majority of firms LPs in the third fund are C-suite executives and managers in multinational banks and other financial institutions. Bello claims that if Fund 3 is able to deliver on its promises of exceptional returns for individual LPs it will be an easy decision to add institutions to the fund.
We aim to create an African investor ecosystem. Then, we will start to build the institutions that can also make investments.
According to Bello, LoftyInc enjoys a strong deal flow and views approximately 30 decks per day. Bello says that the fund gets this much flow due to the fact that portfolio startups founders are the firm's strongest source of exclusive deals. LoftyInc is a VC firm that he believes differentiates it from others.
Jeremy Johnson, CEO of Andela, spoke briefly to TechCrunch about how LoftyInc had backed him before anyone heard anything. It makes perfect sense to do the exact same, sourcing deals and investing into the fund.
The firm also has a large investor base of African origin, both within and outside Africa, through its first fund. Bello says that this angel network doubles as venture scouts.
We invest before major investors, hold the hand on new founders, source their first clients from our large portfolio of over 65 African startups, and our large African-based angel/LP network.
We provide valuable introductions to regulators as well as mentors, partners and top-hires. We are also preferred by founders because we have attracted both early-stage and late-stage investors to previous ventures.
LoftyInc's criteria for choosing companies to invest in are: a large market without much competition, a product that is loved by users, and execution.
LoftyInc, like most VC firms, claims to be sector agnostic. Bello stated that there is a certain affinity for startups in the IoT and fintech spaces.
LoftyInc's pre-seed stage fund is dominated by angel investors. The group has completed over 50 preseed deals this year. The focus of the rest is on Series A deals, with an average ticket size $250,000.
LoftyIncs target fund 3 for Fund 3 is $10M, but Bello told TechCrunch that the company hopes to close more than that amount before the end Q4 2021.
