African technology companies and startups are becoming too attractive for international investors to ignore, according to partners at a fund focused on investing on the continent.
Lexi Nowitzke, general partner at Nordsken22, a $205 million Africa-focused fund, said, “We’re seeing people seriously considering making large investments in.” . “That’s because many of these companies are seeing healthier numbers than their own markets,” she told Bloomberg.
These investments could provide some relief to African technology companies and startups after venture capital inflows plummeted last year. A recent report by the London-based African Private Capital Association said private capital in 2023 will fall 31% from a year earlier to $4.5 billion as investors abandon African economies suffering from high inflation and weak local currencies. became.
“International investors are excited about the fact that these companies are building such great platforms despite all this,” Nowitzke said.
Nowitzke expects investment to be higher than pre-2020 levels, but not as high as in 2021 and 2022, when the post-pandemic boom saw many hasty investments.
“I think I’ll be healthier,” she said. “Investors will start coming back and investing with more due diligence, and hopefully more focus and involvement in the operations of the company and a more reasonable valuation.”
Norskenn22 has invested in six companies so far, including South African neobank Time Group, and has three other investments in the pipeline, Novitzk said. The company plans to increase that number to up to 20 by the end of 2025.
Established in 2022, the fund is a joint initiative with Northzone Ventures partners Hans Otterling and Niklas Adalberth’s Norsken Foundation. It aims to support companies offering “lean tech solutions” such as software, web-based platforms and artificial intelligence. The backers include 30 founders of so-called unicorn companies, or companies that have achieved pre-market valuations of at least $1 billion.
The fund has investments in South Africa, Nigeria, Kenya and Egypt.
“We are also looking more closely at digital payments and neobanks in French-speaking West Africa as a market,” Nowitzke said. “So far, the growth rate has been very low and the growth is quite slow, but with the regulatory changes happening now, we think digital adoption will accelerate even more over the next five years.”
