Nairobi-based VC Fund Manager Novastar Ventures has raised $72.5 million for its second fund, with a target size of $120 million to cover both East and West Africa and has expanded to Lagos, Nigeria.
Novastar backs early and growth stage businesses led by entrepreneurs with the capability and ambition to transform markets and sectors.
Novastar raised the $72.5 million in commitments from existing investors CDC Group, European Investment Bank, Dutch Good Growth Fund and FMO with participation from new investor AXA Impact Fund II joining.
According to Co-founder and Managing Partner Steve Beck: “Our 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.”
Novastar II will invest as little as $250,000 in an unproven business model addressing a big problem in a big market to more than $6 million through multiple capital rounds.
Novastar’s first fund of $80 million plus a $10 million co-investment facility has backed 15 companies, each reflecting the Fund’s focus on mass-market scale potential, business model innovation, and outstanding entrepreneurial leadership. While Fund I continues to invest follow-on capital into the successful businesses in its portfolio, Novastar II targets new breakthrough businesses in East and Anglophone West Africa.
Explaining the expansion to Lagos, Novastar co-founder and Managing Partner Andrew Carruthers said, “We have seen how flexible long-term capital, coupled with local knowledge and innovative business models has catalyzed rapid growth in some truly exceptional enterprises in East Africa, thereby attracting substantial investment from a new category of investors. By establishing a presence in Lagos, with its concentration of talented entrepreneurs addressing a vast market, we want to be the spark to a similar cohort of innovative businesses generating social and economic value for the mass market, attracting substantial investment into West Africa as well.”
