Nigeria’s Ventures Platform rallied investors including the nation’s sovereign wealth fund to conclude a first close of a $40 million fund, months after it made a 20-fold profit from exiting a payments startup.
Other investors in the fund include Shola Akinlade, the co-founder of Paystack, the Nigerian payments company which Ventures Platform exited after it was bought by Stripe at $200 million last year. UAC Nigeria, a conglomerate, and VFD Group, a financial services company also participated.
“This first round is majority local capital, which is also strategically important because it de-risks foreign capital,” Ventures Platform Founding Partner Kola Aina said in an interview. A second round, with global institutional investors, may be closed “in early 2022,” he said.
Mostly Nigerian investors participated in the fund-raising, showing the nation’s startups ecosystem is maturing. Ventures Platform’s 20-fold return from its 2016 investment in Paystack, has shown locals, who hitherto sought opportunities in oil, trading and real estate or took it offshore, that there’s money to be made in technology.
Investment into African startups is set to reach $5 billion this year, a figure higher than what was raised in the previous three years combined. Nigeria delivered multiple unicorns in the period.
Aina, 39, has been in the Nigerian startup space for over a decade, building products and later as an angel investor. Ventures Platform, which has invested in nearly 70 companies so far, has had other exits, some with a 75-fold return, Aina said.
“We have been a first cheque investor and help raise with follow up investors. Now, we are starting to see the exits and it is clear we were leaving money on the table,” Aina said. “What the Paystack opportunity showed us is that this is the guy we backed from day one, we made a significant exit but could have been significantly more.”
The funds will expand the investment portfolio across Africa, focusing on key needs on the continent, including healthcare, payments and education, according to Aina. “We are focused on painkillers not vitamins, critical things that Africans and businesses need,” he said.
The Nigeria Sovereign Investment Authority said participation in the fund is in line with its objectives of stimulating growth through innovative technology, Managing Director and Chief Executive Uche Orji said in a statement.
To “unleash Nigeria and Africa’s potential, we are of the opinion that investment in ventures in the innovation and technology space is essential,” Orji said.