With $20 million committed by notable investors, Seedstars International Ventures II (SIV II) is set to invest in no less than 100 pre-seed and seed-stage companies across Africa, Asia, Middle East and North Africa, and Latin America in the next three years.
This morning, Seedstars launched its second emerging market seed stage fund. The firm announced the first close of the fund with $20 million committed by the International Finance Corporation (IFC), Visa Foundation, The Rockefeller Foundation, and Symbiotics.
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Since 2013, Seedstars has supported over 90 emerging market venture ecosystems, seeing first-hand how the founder talent pool has matured with 2 070 VC-backed start-ups in 2021 in their core markets versus just over 560 in 2017.
Seedstars will leverage this progress and invest in 100 pre-seed and seed stage companies. Investments will be focused on companies building for the future of finance, commerce, health, work and education, with follow-on investments up to Series A.
The predecessor fund invested in 81 companies in over 30 countries, with category-leading investments in all regions including Dastgyr, Foodics, MyRobin, OlaClick and Omnibiz, among others.
Charlie Graham-Brown, Seedstars partner, said, “I have no doubt about the abundance of talented founders or the market opportunities, but the challenges can’t be ignored. Our strategy innovates on so many levels to mitigate risk, be it through our country diversification, portfolio construction strategy, value creation platform, or the blended finance structure. We have a unique recipe, an incredible team, and backers in place to build on the success of the first fund and level the playing field for tech entrepreneurs around the world.”
Seedstars’ focus on supporting scalable technology companies in emerging markets, solving major societal challenges like access to finance, health, or education, and working closely with entrepreneurs to scale their businesses means that the impact thesis is embedded in the investment thesis. The fund also includes a blended finance component with a first-loss tranche that provides downside protection for investments in the lowest-income markets.
Seedstars partner Patricia Sosrodjojo added, “Investing and impact don’t have to be mutually exclusive. Our strategy combines these two critical objectives in one and we believe that is what both founders and investors are searching for.”
Value creation
Venture capital flows in emerging markets have been growing at a 40% rate year-on-year, yet remain just 4% of global volumes. However, cash is only one of the ingredients for venture success and Seedstars distinguishes itself through its Value Creation Platform, built to help portfolio companies scale up rapidly.
The primary component of the Value Creation Platform is the Growth Track, a three-month mentor-led sprint, where portfolio companies are equipped with the tools and methodologies to run a professional growth team.
The Growth Track is led by the fund’s Growth Entrepreneur in Residence, Jon Attwell (ex-Naspers/Prosus) with support from growth practitioners with experience in high-growth firms (e.g. Careem, SkyScanner). The Value Creation Platform also provides companies with access to a vast network of 1,300 mentors, support with fundraising, a group of peers, and various other benefits.
“Seedstars is a true outlier and they have proved that ever since they invested in our pre-seed round,” said co-founder and CEO of Dastgyr, Zohaib Ali.
“On fundraising, they were the most well-connected investors and helped us close the region’s largest Series A. On growth, they manufactured with us an organic ordering system which made Dastgyr a cost-effective B2B marketplace.”
Gender equity
Women in VC represent just 23%, and only 11% of enterprises that attain seed funding in emerging markets are women-led. Gender equity has been a core focus for Seedstars. The team is 50:50 gender balanced at all levels and the first fund has 26% female co-founded businesses.
Seedstars is on track to meet the 2X Challenge and aims to reduce bias through its data-driven selection process with further plans to implement diversity and inclusion training for portfolio companies.
Long-term partners
The fund is co-anchored by four exceptional partners with significant emerging markets impact, and venture capital experience including the International Finance Corporation (IFC), Visa Foundation, The Rockefeller Foundation and Symbiotics.
In addition to the four co-anchors, the fund is backed by a number of serial entrepreneurs, angel investors and family offices bringing significant tech and emerging market know-how to the consortium.
Seedstars is also set to formally debut Seedstars Capital, a fund platform for multiple regional and thematic funds. The platform’s first strategies include Seedstars International Ventures and Seedstars Africa Ventures with more funds set to be announced shortly.
Seedstars welcomes seed stage technology companies in emerging and frontier markets to contact them at investments@seedstars.com.
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