Dozens of tech executives including the founders of Klarna, Skype, Delivery Hero and Flutterwave have started a $200m venture capital fund aimed at finding the next $1bn-plus companies in Africa.
Niklas Adalberth, co-founder Klarna, told the Financial Times that Africa was in a similar situation to Sweden in 2005, the year the fintech was founded, where it was possible to get seed capital for start-ups but there was little to no growth capital available to develop them into potential ‘unicorns’ — companies worth more than $1bn.
The fund, started by the Norrsken Foundation set up by Adalberth, is ultimately aiming to raise up to $2bn by inviting existing venture capital firms such as Sequoia to co-invest, and is announcing a first close of $110m on Monday.
It is in talks with its potential first investments and has 400 companies on its radar, mostly in South Africa, Kenya and Nigeria.
The Klarna co-founder said that before 2005 start-ups in Sweden were satisfied with targeting valuations of $10m until Niklas Zennström, one of the backers of the Norrsken22 fund, sold Skype for $2.6bn.
“Why is the start-up system [in Africa] not creating as many unicorns as for instance here in Sweden? It’s because growth capital is non-existent . . . We want to enable the next unicorns to come out of Africa. If these unicorns can be the same role model as Zennström was for me, it can be a game-changer,” he added.
Thirty founders of unicorns including Adalberth, Zennström, Olugbenga Agboola of Nigerian fintech unicorn Flutterwave, Carl Manneh of Minecraft developer Mojang, Jacob de Geer of Zettle, Niklas Östberg of Delivery Hero, and Sebastian Knutsson of Candy Crush-developer King will put in $65m into the new fund, which will have offices in Cape Town, Johannesburg, Lagos and Nairobi.
The for-profit fund is looking at “where we find the biggest impact” as well as the best financial returns, and will concentrate on sectors such as fintech and health tech where it is possible to leapfrog old technologies, Adalberth said.
Hans Otterling, partner at venture capital firm Northzone, which is also backing the fund, said: “We want to show the world how lucrative it is to invest in Africa. In 2005 venture capital was almost non-existent in Sweden, now almost everyone is here.”
He added: “This is not the white guys coming into Africa. We want to help the best African entrepreneurs . . . We want to extend the network that the rest of the world has access to, but Africa does not.”
The investment team will be led by Natalie Kolbe, former global head of private equity at Actis in South Africa, her colleague Ngetha Waithaka in Kenya, and Lexi Novitske, co-founder of Acuity Venture Partners in Nigeria.
It will have an advisory board that includes Nonkululeko Nyembezi, chair of Johannesburg Stock Exchange; Arnold Ekpe, former chief executive of Ecobank; Phuthuma Nhleko, ex-chief executive of telecoms operator MTN; and Shingai Mutasa, founder of investment group Masawara.