Kenya’s Novastar Ventures to open Lagos office after raising $75.5m for new fund [Updated]

Nairobi-based venture fund Novastar Ventures has made the first close of its Novastar II fund with commitments of $72.5-million. The firm now plans to open an office in Lagos, Nigeria as it expands into West Africa.

In a statement on Tuesday (30 October), Novastar Ventures said commitments had come from AXA Investment Managers, the CDC Group, the European Investment Bank, Dutch Good Growth Fund and the Dutch Development Bank FMO. The fund aims to reach $120-million.

Novastar Ventures invests in early and growth stage enterprises and the Novastar II fund will target East and West African businesses with a positive social impact for low-income households.

Novastar Ventures’ Novastar II fund has a target size of $120-million

Novastar Ventures explained that the fund will invest as little as $250 000 in firms with unproven business models that aim to address “a big problem in a big market’.

Following initial small funding rounds the fund will then invest more than $6-million in high-growth companies through multiple capital rounds.

Through its first fund of $80-million and a $10-million co-investment facility, Novastar Ventures has already invested in 15 companies, including Nairobi-based PayGo Energy, artisan marketplace Lynk and agriculture supply chain platform iProcure.

The firm’s co-founder and managing partner Steve Beck said Novastar Ventures’ vision is to see sub-Saharan Africa “populated” with a growing number of high capacity entrepreneurs building innovative businesses that serve the common good.

“We aim to demonstrate that commercial venture investing can generate both large-scale social benefits for the mass market and attractive financial returns for investors, thereby unlocking more capital to fuel entrepreneurship in the region,” added Beck.

West Africa expansion

Novastar co-founder and managing partner Andrew Carruthers said by opening an office in Lagos, the firm wants to “be the spark” to a cohort of innovative businesses generating social and economic value for the mass market and in so doing so, attracting substantial investment into West Africa.

Novastar Ventures investment director Sapna Sah told Ventureburn that the VC will have a team member in Lagos by the end of the year.

Editor’s note (6 November 2018): The article has been updated to reflect Novastar Ventures investment director Sapna Sah’s comments.

Featured image: Lagos via Facebook