Partech Hits First Close of Largest Africa-focused Fund, at €245M

Partech Hits First Close of Largest Africa-focused Fund, at €245M

Partech, the global technology investment firm, has announced the first closing of its Partech Africa II fund at EUR245 million (US$262 million), already above the target fund size.

Born in San Francisco 40 years ago and now headquartered in Paris, Partech is one of the most active global tech investors in the world. Its current portfolio includes more than 210 companies across 40 countries in Africa, Asia, Europe, and the US.

Partech Africa, meanwhile, is headquartered in Dakar, Senegal, and focuses on Series A and B equity rounds in startups that are using technology to transform areas such as financial services, commerce, education, mobility, and healthcare.

The second iteration of the Partech Africa fund is backed by major development finance institutions, as well as institutional and commercial investors. Partech Africa II will double down on its strategy to identify and support the next generation of category leaders across the continent.

The fund will provide initial tickets of between US$1 million and US$15 million from seed to growth to support entrepreneurs who use a combination of technology and excellent operations to address some of the hard-to-solve but very large opportunities the continent offers across all sectors.

“We had set an ambitious goal for Partech Africa II at EUR230 million, with a hard cap at EUR280 million, essentially doubling the size of our first fund. We overreached it with a closed amount already above the target fund size,” said Cyril Collon, general partner at Partech Africa. “This would not have been possible without the trust and support of our major existing investors. We are honored that top-tier global institutions and strategic commercial investors have decided to back Partech Africa II.”

Partech’s first African fund invested in 17 startups at Series A and B stages across nine countries that operate in 27. According to Deme, that fund’s strategy was to back particular startups going after deep economic sectors that are usually 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.”

TradeDepot, Wave, Yoco, Reliance, and Nomba are a few startups that underscore this strategy. They cut across fintech, retail and FMCG, agency banking, and health tech, sectors responsible for most of Africa’s employment and economic activity.

These startups are capitalizing on increasing access to digital infrastructure and rising consumer and business demand. According to Partech Africa, its portfolio has brought value to over a million merchants and 20 million end users across the continent.

From a VC point of view, Partech says its startups have attracted more than 10% of the investment that has flowed into the continent between 2021 and 2022. Impressively, the venture capital firm also boasts a high-profile exit and unicorn among its ranks: WorldRemit subsidiary Sendwave and Stripe-backed Wave (a spinoff from Sendwave).

Most of these companies had already achieved product-market fit before Partech stepped in and assisted in fine-tuning their business and operational models with funding and other value-adds.

It’s also worth noting that Partech Africa engaged most founders — or vice versa — years before the startups were ready to take any investment; cultivating such relationships, allowed the investor to lead rounds with checks ranging from $1 million to $7 million.

Partech Africa is sticking with this strategy for the second fund. The venture capital firm plans to still back Series A and B companies in fintech, health tech, logistics, mobility, and edtech, among others; however, it is doubling the upper end of its ticket size to $15 million.

Its Fund II’s limited partners come from diverse profiles: DFIs and corporates to African funds of funds, family offices, and HNIs, including anchor investor KfW, and the German Development Bank. Others are existing and new LPs, including Bpifrance Investissement; the International Finance Corporation (IFC), which we reported was investing $26 million last June; South Suez; FMO; Bertelsmann; European Investment Bank (EIB); British International Investment (BII); Deutsche Investitions- und Entwicklungsgesellschaft mbH (DEG); and Proparco.

The firm intends to deploy its capital in more than 20 startups from Fund II. It’s one of the most significant Africa-focused growth-stage funds, including TLcom Capital, Norrsken22, Algebra Ventures, and Novastar Ventures.

The team, distributed across offices in Dakar, Nairobi, and Dubai, is expanding into new locations; Lagos is one. And its operations are augmented by Partech’s robust global platform, which supports crucial functions such as business development and portfolio support, founders community, ESG, finance, compliance, and legal.