Pan-African VC firm, LoftyInc Capital, has announced on Tuesday that it is launching its third fund — LoftyInc Afropreneurs Fund 3 — at $10 million for tech startups in Africa.
The firm has seen the first close of $5.5 million. Some of the limited partners in the vehicle include FBNQuest Funds, syndicates from The Green Investment Club, HNIs from multinationals like Google, Facebook, and ExxonMobil; and Andela CEO Jeremy Johnson, most of which participated in its second fund.
Founded by Idris Ayodeji Bello, LoftyInc Allied Partners, launched its first fund – LoftyInc Afropreneurs Fund 1 in 2012, mainly for pre-seed stage investment. The fund, which was more like a syndicate or an angel group of investors included senior executives in key industries across Africa. To date, over 180 business angels are investing via the first fund and have collectively invested more than $4 million into over 40 startups in Africa. Flutterwave (pre-seed), Andela, Trella, Chefaa, and Koniku are some of well-known Nigeria and Egypt-based startups that secured investments from the first fund.
In 2017, Idris Bello, founding partner of the firm joined forces with Marsha Wulff, an early investor in health tech company Teladoc to launch the second fund, LoftyInc Afropreneurs Fund 2, alongside Michael Oluwagbemi, who also acts as a general partner at the firm. This second fund, which is LoftyInc’s first formal VC fund largely focuses on Nigeria.
Between 2017 to 2020, the firm wrote cheques worth over $1.2 million in nine rounds to six Nigerian startups Printivo, RelianceHMO, Epump, YouVerify, Shyft Power Solutions, and Flutterwave (at pre-Series A).
LoftyInc currently runs three funds simultaneously. This third fund follows the thesis of LoftyInc’s first fund: investing in startups across different markets and sectors in Africa and the diaspora.
The fund says it wants to take big bets on markets outside the Big Four — Nigeria, Kenya, South Africa, and Egypt.
LoftyInc has written checks to over 20 startups since it began raising money for the third fund. They cut across various industries like e-commerce, fintech, healthcare, logistics, and media in different regions within and outside Africa.
In Francophone Africa, the company has invested in Afrikrea and Star News Mobile. Then in Omnibiz, RXAll, Sudo Africa, Tech Advance, Aladdin, Flex Finance, Star Kitchens Group, and EPump across West Africa.
For LoftyInc’s portfolio in North Africa, there’s Odiggo, Illa, Tagaddod, and Instadiet. Akiba Digital, Beamm, and Zazu Africa make up LoftyInc’s portfolio in South Africa, while Cashback and Dash are the startups funded in East Africa. LoftyInc also has Diasporan interests in OjaExpress and FitMatch.
On why they didn’t raise a higher amount for the fund, Bello said “my approach is very different. I’m quite organic which is evident in how we moved from a group of angels to LPs. I feel once you get up to $50m to $100m, your problem becomes good deployment, especially in Africa. And what I’m doing is to build a smaller base to a pyramid so when I’m raising a large fund, it won’t be a problem deploying the funds.”
Bello also points out that most of the LPs in the firm’s third fund hold C-suite and managerial positions in banks and other multinationals. Adding that if Fund 3 can deliver on its promise to make fantastic returns for these individual LPs, then it will be easier to onboard other institutions they work with for a bigger fund.
“We want to build an ecosystem of African investors. After that, we’ll start building up the institutions to also partake in making investments.”
In terms of what LoftyInc looks for in companies it invests in, there’s a bias towards those who go for a large market with little or no competition, a product that users love, and execution.
As with most VC firms out there, LoftyInc claims to be sector agnostic. However, there’s some affinity towards startups playing in the IoT, fintech, and health tech space, Bello said.
LoftyInc’s first fund, mostly catered to by angel investors, is most bullish at the pre-seed stage. This year alone, the group has done over 50 pre-seed deals. For the others, the focus is on seed to Series A deals with an average ticket size of $250,000.
While LoftyInc’s target for Fund 3 is $10 million, Bello tells TechCrunch that the firm is hoping to achieve a final close above that figure before the end of Q4 2021.