Norrsken, VCs, and 30 unicorn founders have established a $200 million fund to support African growth-stage startups

Niklas Adalberth’s Norrsken Foundation has made headlines again, just two months after launching its Norrsken House in Kigali, Rwanda, with plans to house thousands of entrepreneurs by next year.

This time, the foundation has joined forces with thirty unicorn founders as well as a couple of seasoned venture capital and private equity investors to launch a $200 million fund aimed at African startups.

According to a statement obtained by TechCrunch, the Norrsken22 African Tech Growth Fund has reached its first close of $110 million. It is Norrsken’s second fund, following the closing of a €125 million impact fund for European startups in March.

Norrsken’s founding partner is Hans Otterling, a partner at Northzone, a U.K.-based early VC firm that led the investment in Adalberth’s previous company Klarna.

Natalie Kolbe, the ex-global head of private equity at Actis, a private equity fund investing in emerging markets, her colleague Ngetha Waithaka, and Lexi Novitske, the ex-managing partner at Acuity Ventures Platform, make up the firm’s investment. On a conference call with TechCrunch, Novitske stated that the company is in discussions with a few DFIs in order to reach a final close later this year.

Novitske was a principal at Singularity Investments prior to joining Acuity. API fintechs like Mono and OnePipe are among the firms’ portfolio companies, as are exited companies like Flutterwave, Paystack, and mPharma.

Africa VC funding reached an all-time high of over $4 billion in 2021, more than what the continent’s startups raised in the previous two years combined. Growth and late-stage deals, such as $100 million-plus rounds from unicorns Andela, Flutterwave, Chipper Cash, OPay, and Wave, as well as other companies, have largely fueled this expansion. Nonetheless, they were far fewer than early-stage deals, according to Briter Bridges and The Big Deal.

Aside from the scarcity of growth and late-stage checks, there is another issue. The majority of these large deals are frequently financed by international venture capitalists, as local investors typically focus on pre-seed to Series A rounds with micro to medium-sized funds.

“What’s happening, and we’ve seen this in our Acuity portfolio, is that our founders, as they grow and want to scale, have to take time away from their business and spend it with Silicon Valley-based investors who they have to educate on the Africa growth story,” Novitske told TechCrunch in an interview.

“These investors are bringing capital, which is valuable, but they are not bringing local knowledge to help those companies scale across the continent.” And it is this missing middle that we hope to fill with this fund.”

Norrsken22 intends to be that growth-stage local-based firm that will enable startups to unlock significant partnerships to grow revenue, find the best talent, and facilitate expansion plans across Nigeria, Kenya, and South Africa, according to her.

The firm, which has offices in the aforementioned countries, is the latest large-scale Africa-focused venture capital fund to join the ranks of TLcom Capital, which recently closed nearly half of its new $150 million fund; Novastar Ventures, which has a $200 million fund; and Partech Ventures, which has a $143 million fund.

While the others rarely invest beyond Series B rounds, Norrsken22 is willing to go further. Waithaka, speaking about the fund’s strategy, stated that Norrsken22 intends to invest 40% of its capital, or approximately $80 million, in Series A and B companies, with the remainder going into follow-on rounds from Series C until exit.

He went on to say that the firm will make 20 investments with an average ticket size of $10 million and may go as high as $60 million, including follow-on rounds in some portfolio companies.

“I think that reserve capital pool is really important because we want to be able to support companies throughout their entire lifecycle,” Kolbe continued, picking up where Waithaka left off. “Innovation is uncertain, and it doesn’t happen overnight, so we want to be sure to be able to support the top winners in the company so they can be the champions in the tech ecosystem.”

Norrsken22 will use its general partners’ years of experience and investment philosophies to back startups in fintech, medtech, edtech, and market-enabling solutions such as B2B marketplaces and inventory management businesses, according to sectors.

Norrsken will look at Egypt ‘opportunistically,’ according to Kolbe, whose previous firm Actis backed Egyptian fintech giant Fawry as it prepared to go public in 2019. Deals from the country that may be of interest to Norrsken22 will be those that plan to expand into the four markets that Norrsken22 is currently interested in: Nigeria, Ghana, Kenya, and South Africa.

Norrsken22’s $110 million first close includes $65 million from a global group of unicorn founders.

Flutterwave co-founder Olugbenga ‘GB’ Agboola, Skype co-founder Niklas Zennström, iZettle co-founder Jacob de Geer, and Delivery Hero co-founder Niklas Stberg are among them. Carl Manneh, co-founder of Mojang, Sebastian Knutsson, co-founder of King, and Willard Ahdritz, founder of Kobalt Music are among the others.

Aside from capital, the unicorn founders will assist founders in understanding what it takes to take their companies from series A to billion-dollar companies, according to the founding partners. The Norrsken22 African Tech Growth Fund is also supported by a local advisory council board, which will assist portfolio startups in navigating business challenges across the continent, according to the partners.

The chairman of the Johannesburg Stock Exchange (JSE), Nonkululeko Nyembezi, is a member of this board. Others include Arnold Ekpe, the former group CEO of pan-African bank Ecobank, Phuthuma Nhleko, the former CEO of telecoms giant MTN, and Shingai Mutasa, the founder and CEO of Harare-based investment firm Masawara.

The Norrsken Foundation, as an anchor shareholder, intends to reinvest 22 percent of its carry in projects across the continent, including the Kigali House.