Investors update: DFC invests $25m in Novastar’s Africa People + Planet Fund

DFC invests $25m in Novastar’s Africa People + Planet Fund

Highlights

• The US International Development Finance Corporation (DFC) has made an equity investment of $25 million in a new fund by Pan-African venture capital firm Novastar Ventures, to back founders building agriculture and climate solutions.
• The DFC revealed details of the transaction during its latest update detailing the transactions it had approved over the last few months.
• TechCrunch reported that the Nairobi and Lagos-based VC firm targets to raise over $200 million via the Africa People + Planet Fund, making it one of the largest funds in the region.

Source: TechCrunch

Our Takeaway

DFC’s backing will provide much-needed capital to these entrepreneurs and support their efforts to develop sustainable solutions to address the challenges faced by Africa’s agriculture sector and climate change. Additionally, it shows that international organizations recognize the potential for innovation and impact in the African continent. The Africa People + Planet Fund is Novastar’s third pool after the $108 million Africa Fund II, which saw it enter West Africa. The East Africa Fund—an $80 million fund with a $12.5 million co-investment facility—was its maiden vehicle that invested in 15 startups within the region.

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Paymenow raises $14m for its earned wage access platform

Highlights

• Paymenow, an earned wage access platform, has secured a $14 million debt facility through Rand Merchant Bank (RMB), marking the first-of-its-kind structure for the EWA market in South Africa.
• EWA is a financial wellness offering to employees that allows them to access a percentage of their accrued wages before the end of their payroll cycle, providing a way to unlock funds without the threat of costly loans and improving financial wellness.
• The agreement follows Paymenow’s reported growth in several industries; it claims to serve over 200,000 employees, with that figure projected to double in the next year.

Source: Ventureburn

Our Takeaway

Earned Wage Access is a growing phenomenon in Africa, due to the increasing number of companies that offer this service as part of employee welfare packages. For startups and investors, this presents a significant opportunity. EWA is still largely an untapped market and startups that develop such platforms have the potential to scale quickly, via partnerships with large corporations and employers to offer their services. Overall, the growth of EWA in Africa offers many benefits and opportunities for startups and investors alike.

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African tech funding declined by 57% in Q1 2023

Highlights

• African tech startups raised $649 million between January and March this year, down 57.2% from $1.5 billion raised in the corresponding period in 2022, per Disrupt Africa’s funding report. 
• In total, 633 African tech startups raised over $3.3 billion in 2022, an increase of 12.2% on 564 in 2021, while the total secured funding jumped 55.1% from $2 billion.
• This year looks set to be a regressive one, however, as so far only 87 startups have secured funding, less than half the number (175) that had done so by this time last year.

Source: Disrupt Africa

Our Takeaway

While the global venture capital market took a hit last year, Africa bucked the trend as the only region which saw year-on-year growth. But it appears the global VC crunch has caught up with the continent. Despite the slowdown, however, several investors and VC firms are still actively investing in startups focused on the region and remain bullish on Africa’s potential for growth. With a population of over 1.2 billion people, a growing middle class, and a thriving tech ecosystem, Africa remains the next frontier for investment opportunities.