Partech has closed its second African fund, Partech Africa II, for €280 million (more than $300 million), just one year after reaching its first close.
At that size, Partech Africa, which originally aimed to 230 million euros before its fundraising efforts began, cements its position as the largest fund dedicated to African startups.
Amid a backdrop where global venture capitalists and institutional investors are pulling out of Africa, Partech Africa’s recent fund closure is significant. The continent experienced a notable decline in investment activity, with a 50% decline in 2023 compared to the previous year, as highlighted in a Partech report. This setback, influenced by global economic changes and local challenges, translated into a reduction in venture capital inflows for African startups, which totaled between $2.9 billion and $4.1 billion last year, down from $4.6 billion last year. dollars and 6.5 billion dollars in 2022.
The impact was felt across all investment stages, with early-stage deals down 33% and growth-stage deals down 39%, according to Partech’s findings. While Partech Africa, known for leading rounds, cannot reverse this trend alone, its focus on seed to Series C rounds can offer some stability and support for startups navigating these difficult times.
Partech Africa wants to support founders at various stages of their journey, from early to later rounds, leveraging their position in the ecosystem, the company’s general partners said. “The ability to anchor rounds at all stages, from seed to early growth, is more critical than ever,” Cyril Collon said in a statement.
Meanwhile, in an email to TechCrunch, Tidjane Deme says the venture capital firm’s expanding team will allow it to deploy capital effectively and offer support to portfolio companies at these stages. With offices in Dakar, Nairobi and Dubai, Partech Africa has recently established a presence in Lagos, where it is actively recruiting to collaborate closely with startups in the region, underscoring the importance of the city, as a third of companies in The company’s portfolio is based there. However, he clarified that the firm will deploy most of its second fund between the Series A and B rounds.
Among its second fund investments is Revio, a South African payments orchestration platform, where Partech Africa co-led the seed round with global fintech fund QED. Additionally, the company has made undisclosed investments in an Egyptian proptech and a Senegalese e-commerce startup. Partech Africa intends to back more than 20 companies, with initial investments ranging between $1 million and $15 million, he revealed.
The Dakar-based venture capital firm, which has backed 17 startups in its first fund, prioritizes sectors such as fintech, agritech, healthcare technology, retail, consumer goods and agency banking, which are crucial for employment and economic activity in Africa. Notable investments include Wave, TradeDepot, Yoco and Reliance.
“Companies in the first fund can benefit from the additional capital from the first fund, but not from the second,” Deme said of the company’s deployment strategy. “We continue to support Fund 1 companies on their journey with capital and in many other ways.”
During its first closing last February, most of the fund’s strategy was covered.
Partech Africa’s investor base reflects a wide range of profiles. During its first closing, development financial institutions, commercial investors, African funds of funds and family offices were some of its limited partners. For its second closing, it attracted participation from US and Middle Eastern pension funds, sovereign wealth funds, the Dubai Future District Fund (DFDF) and the African Reinsurance Corporation (Africa Re).
“We are grateful for the support and commitment of our investors: almost all Fund I investors reinvested and some doubled their commitment,” Collon said. “We are also honored to have the support of a new set of strategic investors from the US, Middle East and Africa, for some of whom this marks their first commitment to African technology.”
Partech’s African fund is among several notable funds to emerge on the continent last year, despite challenges for fund managers in raising capital as limited partners examine strategy and track record. Other large funds include Norrsken22, Al Mada and Novastar’s Africa People + Planet. Additionally, companies such as Enza Capital, Equator, Knife Capital and E3 Low Carbon Economy Fund for Africa (E3LCEF) have also closed major funds, reflecting continued investor interest in Africa’s growth potential.
