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The US venture capital arm of a global nonprofit has raised $61.6 million, nearly double the size of its pilot fund, to back dozens of startups that provide financial services in Africa, at a time when interest in African startups from Silicon Valley has cooled.
The Washington-headquartered Accion Ventures, formerly known as Accion Venture Lab, reached the final close of a new fund at $61.6 million, counting the Dutch bank FMO, France’s development agency Proparco, and the Ford Foundation among its investors. It is also backed by US card payments giant Mastercard and insurance major MetLife.
After fully deploying a $33 million fund raised in 2019 and recording three recent exits in Africa, Accion plans to write checks of up to $1 million at a time in early-stage fintech startups from the successor fund, co-managing partner Amee Parbhoo told Semafor.
In recent months, the firm has seen the emergence of “probably the strongest founders” building and scaling new companies in its target markets, Parbhoo said, considering that startup fundraising in a post-zero interest rate policy world remains a global challenge. Accion’s investments from the new fund — made before reaching a final close last month — include Nigerian payroll management startup PaidHR in June, and Kenyan online commerce venture Flowcart (formerly called Sukhiba) last year.
Parbhoo, whose team visited Nigeria in August to meet customers of one of the firm’s latest startup investments as part of a due diligence process, believes “the quality of entrepreneurs we’re seeing who lived through the ups and downs of the last six years and are building something new in fintech is quite exciting.”
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Only a handful of investment funds seeking African startups have been announced or raised this year. Among the few are the $55 million climate tech fund by Kenya and UK-based firm Equator, a $43 million first close of Nigerian firm LoftyInc’s third fund, and Endeavor Catalyst’s $300 million fund.
However, Accion adds to the pool of existing funds still being deployed — like Partech Africa’s $300 million fund, and Norrsken22’s $205 million fund — into African startups. African startup fundraising this year is on track to lag 2022’s peak of nearly $5 billion, but it showed recovery signs between January and June, and could surpass last year’s low of $2.2 billion, according to deal-tracking platform Africa: The Big Deal.
Generating cash returns from previous deals makes Africa investing appealing for Accion and helps the firm make the case for doubling down to limited partners, Parbhoo said. The firm’s recent exits have been on the continent, including Kenyan farm financing and insurance startup Apollo Agriculture, South African small- and medium-sized enterprises lender Lula, and in another Kenyan agriculture insurance startup Pula.
The case for investing in Africa has been helped by growing discipline and diligence among investors, especially as leverage in fundraising negotiations has shifted away from startups to investors. “The valuations we see are more in line with global comparables than they probably were in that early 2020 to 2021 period,” Parbhoo said.
The View From Lagos
Seye Bandele, co-founder and CEO of PaidHR, said that Accion’s investment in his startup was “the most inclusive, transparent” funding process he has been through.
“It helps that these guys have seen 30, 40 companies like yours and they’ve seen some winners. So they know some things you may be trying to start that are already mistakes,” Bandele told Semafor.
Notable
- Two Japanese companies plan to invest $20 million in startups in Africa and the Middle East, with checks of up to $2 million.