Verod-Kepple Africa Ventures (VKAV) has announced its plans to support up to 21 growth-stage companies across the continent with a recently closed first fund of $60 million.
The pan-African venture capital firm has reached this milestone with the backing of new investors, including Nigeria’s SCM Capital (formerly Sterling Capital Markets Limited) and the only non-Japanese investor. Other recent investors (limited partners) include Taiyo Holdings and C2C Global Education Japan.
The firm’s fresh capital injection comes after its first and second close in 2022 and last year, respectively. The initial funding was provided by major Japanese institutions such as SBI Holdings, Toyota Tsusho Corporation, Sumitomo Mitsui Trust Bank, Japan International Corporation Agency, and the Japan ICT Fund.
Verod-Kepple is the latest African venture capital firm to receive funding in the midst of a current investment downturn. With this new support, the firm aims to provide much-needed capital to series A and B startups, as locally-based pools for growth-stage companies are severely limited.
“Over the last few years, we have seen a growth in pre-seed and seed funds. However, we felt there are not enough funds at the growth-stage of investing to get these companies to the next level in terms of scale, exits, or even being sustainable profitable businesses,” shared VKAV partner Ory Okolloh with TechCrunch.
“Our focus is on Series A and B, but we also have the ability to invest earlier in pre-series A if we see a strong opportunity. We believe there is still a need for more growth-stage capital with locally-based investors,” she added.
Okolloh, along with partners Ryosuke Yamawaki and Satoshi Shinada, co-founded the VC firm in 2022 as a joint venture between Verod Capital, a private equity firm, and Kepple Africa, a Tokyo-based venture capital firm.
The VC firm emphasizes the importance of their collaboration in providing meaningful hands-on support to portfolio companies during their scale-up phase. This includes bringing operational best practices, improving governance structures, and navigating the complex macroeconomic environment in Africa. Verod-Kepple noted that as more startups progress from pre-seed and seed stages to Series A and B, a more institutional approach is necessary for their successful transition and scaling.
How VKAV Invests
The VKAV fund’s primary focus is on startups that are building infrastructure for the digital economy, solving inefficiencies encountered by businesses, and creating new markets for the emerging consumer population. Okolloh explained that their interest in the latter is attributed to their desire to support companies targeting shifts in consumer trends.
The VC fund typically invests between $1 million and $3 million with the ability to follow-on, having already deployed $17.5 million. On average, VKAV invests $1.5 million in 12 companies from Nigeria, Egypt, Kenya, Morocco, Ivory Coast, and South Africa. The firm’s investees span various sectors, including fintech, mobility, e-commerce, proptech, deeptech, insurtech, energy, and healthcare. Some notable investments include Uber-backed Moove Africa, climate-tech scale-up KOKO Networks, Nigerian shared mobility startup Shuttlers, aerospace startup Cloudline, Morocco’s b2b e-commerce and retail startup Chari, and insurtech mTek-Services.
“As an investor, the Japan connection is important, and we hope to expand that later on to even a broader Asia connection. Being immersed in stories and experiences and collaborating with investors and other partners from a market where you can see economic transformation in your lifetime is critical,” Okolloh stated.
While the fund is sector-agnostic, it is paying close attention to Vertical ERP startups, those offering embedded financial services, and players in the future of work space. VKAV is also increasingly utilizing AI to understand how the emergence of Gen AI as a fundamental infrastructure will impact the production and distribution of tech-enabled businesses.
Okolloh noted that the firm plans to continue exploring other ecosystems, including Angola, Zambia, DRC, and Tunisia, through its team or partner investors. They are actively searching for new investment opportunities, especially in underserved markets, as they continue to expand and solidify their pan-African presence.
“Given the diversity of markets, shifting macros, and underserved markets in terms of investors, we believe taking a Pan-African and sector-agnostic approach is crucial,” shared Okolloh, who has extensive experience in tech and investment, having previously served as an executive at Omidyar Network and Google Africa.
“We are definitely looking for a diverse portfolio, not just in terms of gender and founders, but also in terms of sector and market.” she added.
The Verod-Kepple fund is part of a growing number of African VC funds receiving backing from Japanese institutional investors looking to diversify their risks. Recently, Novastar Ventures also received capital commitments from the MOL Group and SBI Holdings.
Okolloh expressed excitement about the opportunity to learn, partner, share, and exchange with a different part of the world. She believes that investing in exceptional founders in a meaningful way that enables them to thrive is the most crucial aspect of their work.
“I’m excited about the opportunity to learn, partner, share, and even exchange with a different part of the world where their experiences are much more relatable. And most importantly, backing exceptional founders in a meaningful way that allows them to thrive.”
