A bold investment

Partek closes its second fund with €280 million to support startups in Africa

“Partech” has closed its second African fund, “Partech Africa II,” at €280 million (over $300 million) within just one year of reaching the first close.

With this size, the “Partech Africa” fund solidifies its position as the largest fund dedicated to African startups, originally targeting €230 million before fundraising efforts began.

Against the backdrop of global capital and institutional investor retreat from Africa, the recent closure of the “Partech Africa” fund is significant.

The continent witnessed a notable decline in investor activity, with a 50% decrease in 2023 compared to the previous year, as reported by Partech.

This withdrawal, influenced by global economic shifts and local challenges, translated into a decline in investment capital flows to African startups, ranging from $2.9 billion to $4.1 billion last year, compared to $4.6 billion to $6.5 billion in 2022.

This impact extended across all investment stages, with seed-stage deals dropping by 33% and growth-stage deals by 39%, according to Partech’s findings.

While “Partech Africa,” known for leading fundraising rounds, can’t single-handedly reverse this trend, its focus on seed to Series C rounds may provide some stability and support to startups during this challenging period.

“Partech Africa” aims to support founders across various stages of their journey, from inception to later rounds, leveraging its position in the ecosystem, as affirmed by the company’s general partners.

Cyril Collon stated, “The ability to secure rounds at all stages from seed to early growth is more critical than ever.”

Simultaneously, in an email to TechCrunch, Tidjane Dème remarked that expanding the investment capital team would enable effective deployment and support for portfolio companies across these stages.

With offices in Dakar, Nairobi, and Dubai, “Partech Africa” recently established a presence in Lagos, actively engaging with startups in the region, underscoring the city’s importance where a third of the company’s portfolio resides.

However, he clarified that the majority of the second fund would be deployed between Series A and B rounds.

Among the investments from the second fund is “Rehive,” a South African payment coordination platform, where “Partech Africa” led the seed round in collaboration with the Global Financial Technology Innovation Fund “QED.”

Additionally, the company made undisclosed investments in an Egyptian real estate technology company and a Senegalese e-commerce company.

“Partech Africa” intends to support over 20 companies, with initial investments ranging from one to fifteen million dollars, as disclosed.

The Dakar-based investment company, which supported 17 startups in its first fund, prioritizes sectors such as financial technology, agriculture, healthcare technology, retail, fast-moving consumer goods, and agency banking, vital sectors for employment and economic activity in Africa. Notable investments include “Wave,” “TradeDepot,” “Yoco,” and “Reliance.”

Dème commented on the investment strategy, saying, “Companies benefit from supplementary capital from the first fund but not from the second fund.

We continue to support first fund companies throughout their journey with capital and in many other ways.”

More of the fund’s strategy was covered during its first close last February.

The investor base of “Partech Africa” reflects a diverse set of profiles.

During its first close, among its limited partners were development finance institutions, commercial investors, African funds, and family offices. For the second close, participation came from American and Middle Eastern pension funds, sovereign funds, the Dubai Future District Fund (DFDF), and the African Reinsurance Corporation (Africa Re).

Collon said, “We are grateful for our investors’ support and commitment: almost all first fund investors reinvested, with some doubling their investments.

” He added, “We are also honored to receive support from a new group of strategic investors from the United States, the Middle East, and Africa, and for some, this represents their first investment in African technology.”

“Partech Africa” stands among prominent funds that emerged on the continent last year, despite challenges faced by fund managers in raising capital while limited partners scrutinize strategy and track record. Other large-sized funds include “Naspers22,” “Al Mada,” and “NovaStar Africa People+Planet.

” Additionally, companies like “Enza Capital,” “EchoVC,” “Kenya Capital,” and the “E3 Low Carbon Economy Fund for Africa” (E3LCEF) have also closed significant-sized funds, reflecting continued investor interest in growth potential in Africa.

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