In 2015, Jack Knellinger, having worked as a software engineer, teamed up with Dave Richards, and Will Poole to embark on a venture capital adventure. The trio discovered each other while working on some acceleration programmes. They were armed to teeth with passion for their goal. Their idea was to create a different approach to VC investments using fund managers.
So on their coming together, a company named Capria, which means, capital flow, was born. The name Capria represents what the three cofounders had in mind for their VC adventure.
Capria’s playbook was shaped by experiences that Jack, Richards and Poole acquired while they worked in and outside their acceleration programmes. Jack’s time at Ashoka, the global network for social entrepreneurs, undoubtedly sparked his entrepreneurship gumption that has notably propelled Capria to growth.
Seven years later, Capria has become a household name in the global tech industry, with more than $1 billion invested in startups across the Global South – Latin America, Africa, and Southeast Asia.
In an interview with Tekedia’s Samuel Nwite, Capria’s Partner/Co-founder Jack Knellinger and Loraine Achar, the company’s Investment Associate, overseeing its business in Africa, shared some insights on Capria’s playbook, investments, and the future of Africa’s tech ecosystem.
Seven years after Capria was founded, it has become one of the notable VC firms in the world: Would you attribute Capria’s success to your strategy of using fund managers?
Jack: Our on the ground investing partners are key to our ability to find and enter into deals that we might not otherwise have access to without them. By investing in and partnering with local fund managers, we are able to evaluate pre-screened deals that have been vetted, diligenced, and selected from amongst hundreds of other potential deals. Fund managers investing in Africa that we have invested in include Lateral Frontiers VC, Atlantica Ventures, and Global Ventures. These fund managers are a few of those that make up the global Capria Network which is the leading global network of fund managers from the Global South collaborating to deliver superior returns and scaled impact.
Our local investing partners, who are typically investing at the early-stage in startups, provide us with a strong funnel of companies from which we can select for early-growth investments.
As a woman, what has your experience been overseeing Capria’s businesses in Africa in an industry dominated by men?
Loraine: Capria is definitely focused on investing in local and diverse teams and our portfolio is evidence of that – 2 of the 3 funds we have invested in have female partners. There is definitely a lot that needs to be done in this area in the ecosystem but I am also noting the steps that are being taken in the market to correct this.
According to UNESCO, women represent 30% of professionals in Africa’s tech sector. This is above the global average of 28%. This growth comes from coordinated action to involve women and girls in tech and STEM fields on the continent. Initiatives such as Women in Tech Africa, She Code Africa, and Africa Code Week are equipping women and girls with skills and opportunities aimed at reducing gender disparity. Last year, Ingressive for Good (I4G) launched a ‘Women in Design’ programme, which awarded design scholarships to 1,000 women.
There are also firms that are coming up that will be focusing solely on supporting women-led enterprises: FirstCheck Africa, an angel fund for women-founded/co-founded tech start-ups bodes well for female tech empowerment and ShEquity, that is an investment firm that promotes women’s entrepreneurship in Africa, will invest in and support more than 100 high-potential women-owned or led businesses.
Capria’s investments in Africa appear to be centered on HRtech, logistics, fintech, edtech, healthcare and climate: Do you see growth opportunities in other industries in the African market? For instance, agritech?
Jack: We see growth opportunities in sectors that are critical to economic growth and that can withstand economic downturns. Some of the biggest challenges in Africa are: a large percentage of the population that is still unbanked or underbanked, supply chain issues, access to food, and affordable and quality healthcare. Capria’s portfolio, which includes investments in Paymob, TemApt, MAX, Sendy, WhereIsMy Transport, and SeamlssHR, are solving for some of these issues.
Did your experience working with Ashoka in any way shape the strategy that Capria is using today?
Jack: Capria’s strategy was largely influenced by the investing journey my co-founders and partners, Will Poole and Dave Richards, had throughout India in the early days of the development of the VC ecosystem there. The three of us had worked on various startup efforts about 5 years prior to starting Capria and we all strongly believed that in order to be successful in investing in early-stage and early-growth opportunities, it was critical to have an on the ground presence. From a personal standpoint, after spending time as a software engineer, I went on a series of entrepreneurial journeys and each one of those experiences allowed me to bring a unique perspective to what we’ve been building at Capria.
What has been your experience working with fund managers?
Jack: We have partnered with more than 20 fund managers throughout Africa, Latin America, India, and SE Asia. Collectively, they’re managing more than US $1B and investing across more than 30 countries throughout the Global South. About 50% of them are managers with existing AUM and the other 50% are first time managers. Since we’re a GP ourselves, we know first hand the challenges fund managers face and we look to bring our global knowledge and connections to the forefront, pulling best practices from not only our own experience but also from the experience of the other managers we work with around the world. We work closely with our fund managers across the nine different areas that comprise our proprietary Capria Quantum framework and that we believe are crucial to master in order to be a top tier investment firm.
Now let’s go back to the early days: How did the idea of Capria begin?
Jack: After my partners, Will Poole and Dave Richards, had launched an investment fund in India a few years prior to Capria they started to receive interest from entrepreneurs in other emerging markets who were seeking early-stage capital. India’s VC ecosystem was starting to come to life but it was clear there was a lack of local, institutional capital across much of the Global South. As a result, I came on to lead our initial discovery effort to see if some of our underlying assumptions were correct and figure out if there was an opportunity to pursue. We debated setting up a series of our own funds to unlock early-stage capital for entrepreneurs in other markets but ultimately determined that the scale of the opportunity required a different approach so we decided to invest in and partner with fund managers, then invest alongside them. By taking this approach we were able to much more quickly reach scale on a global level with reach across the major tech hubs throughout the Global South.
Your ticket size is $500k to $3 million for fund managers and about $1 million and above for startups, why do you have a cap?
Jack: We typically invest anywhere between US $1-3M in companies and between US $500K-US $3M in funds. This enables us to build out a well-diversified portfolio in terms of geographic spread and sector focus while managing risk.
What attracts you to fund managers and startups that you invest in?
Jack: We have a robust screening and due diligence process for investments in both funds and companies:
Fund Managers – We look to invest in local, diverse, and experienced fund managers that have boots on the ground and therefore have extensive local context and networks to enable them to support the companies they are investing in. We want to see learning agility, grit, integrity, and a track record of experience that complements their investment thesis. We’re also keen to support managers that are investing in early-stage opportunities (Seed – Series B typically).
Companies – We focus on companies that are providing essential services and products in their respective markets that are poised for growth and have achieved product market fit. Typically we’re looking at companies that are raising Series B though we’ll also evaluate mature Series A opportunities that we believe have breakout potential. While we are generally sector agnostic, we look to come into companies where we can add value and support them on their journey. From a sector standpoint, this means we’re looking at technology companies in the fintech, mobility and logistics, healthcare, agriculture, and education arenas.
Where do you see Capria in the next five years?
Jack: We’re in the midst of raising our next fund now (targeting US $100M+) and we’ll continue to invest in strong funds as well as the most promising opportunities in their underlying portfolio. Over the next five years, we anticipate our underlying portfolio (of Capria and the Capria Network) will grow to 500+ exceptional companies across Africa, Latin America, India, and SE Asia that will demonstrate what it means to produce strong financial returns and impact at scale.
Your investments in African startups, especially in Nigeria, Egypt and Kenya, form a large part of your portfolio: Do you see a great future for the African tech market? If so, how much more money do you expect Capria to invest in the market?
Loraine: There is definitely a great future for the Africa tech market. We are already seeing signals of an evolving and maturing ecosystem such as: Second-time founders – more experienced founders – 3 of the 6 founders we have invested in Africa are 2+ time founders (SeamlessHR, WhereIsMyTransport and Sendy)
Startup founders becoming investors – most notably the founders of Paystack and Flutterwave have been investing in early-stage startups – so the cap table of a startup now has a combination of different skillsets.
Africa is becoming a source of tech talent:
- Leading to the growth of talent accelerators across the continent which aim to create new pathways to careers in tech in Africa. Such programmes can turn Africa into a pool for global talent in tech.
- Tech giants such as AWS, Microsoft, Google, and Visa – are also setting up bases in the continent, evidencing the growth of economies and startup sectors.