Partech Creates Record as it Closes $263M in its Africa-focused Fund, Partech Africa II
Partech, a global venture capital firm, announced today the first close of Partech Africa II at $263 million, a significant milestone for the African tech ecosystem. This fund, the largest Africa-focused fund to date, will bring much-needed capital to the continent and aid in the growth of startups in a variety of sectors. Partech Africa II is the follow-up to Partech Africa I, which debuted in 2018 and raised $143 million.
According to general partners, Tidjane Deme and Cyril Collon the VC firm, which focuses on early- and growth-stage startups across the continent, initially targeted to raise $250 million for its second African fund and reach a first close of $160 million, however, due to overwhelming interest from LPs, Partech Africa II outperformed the initial target for the entire fund at first close.
They further explained that Partech’s strategy for its second African fund is to build on the success of its first fund, which invested in 17 startups at the Series A and B stages across nine countries, by investing in early- and growth-stage startups across the continent that are pursuing deep economic sectors that are typically highly fragmented and informal in Africa “with many inefficiencies where bringing a tech platform with robust operations can build something that creates a lot of value.”
How Partech Plans to Deploy it Partech Africa Funds II
The firm intends to back Series A and B startups in fintech, health tech, logistics, mobility, and edtech, among others; however, the upper end of its ticket size has been increased to $15 million. This will increase the capital available to startups seeking larger investments and allow them to scale up their operations more quickly.
Partech’s Fund II attracted a diverse range of limited partners, including anchor investor KfW, the German Development Bank; Bpifrance Investissement; International Finance Corporation (IFC); South Suez; FMO; Bertelsmann; European Investment Bank (EIB); British International Investment (BII); Deutsche Investitions- und Entwicklungsgesellschaft mbH (DEG); and Proparco.
It further proves that investors from all over the world are interested in African tech startups, which will help bring more capital to the continent. Partech has also had a high-profile exit: WorldRemit subsidiary Sendwave and Stripe-backed Wave (a spinoff from Sendwave). These exits show that there are viable investment opportunities in African tech startups, which will encourage more investment in this sector.
Before Partech stepped in and helped fine-tune their business and operational models with funding and other value-adds, the majority of these companies had already achieved product-market fit. It’s also worth noting that Partech Africa reached out to most founders — or vice versa — years before the startups were ready to accept investment; cultivating such relationships allowed the investor to lead rounds with checks ranging from $1 million to $7 million.
Overall, Partech’s new fund will benefit the African tech ecosystem by bringing much-needed capital into the sector and providing access to experienced investors who can provide valuable advice on quickly scaling up operations while also providing an exit opportunity for investors seeking returns on their investments.