Los Angeles-based venture capital firm, Black Ostrich Ventures, has announced the raise of $20 million in pre-seed and seed-stage funds for African startups.
The fund will cover only startups in the tech, cleantech, supply chain, and ag-tech sectors, with a diversion from the Fintech startups that have continued to receive the most funding on the African continent.
The funds, which are backed by LPs in New York and high-net-worth individuals, will be specifically used to support startups in Tanzania, Zambia, Uganda, and Morocco, with cheque sizes ranging from $50,000 to $200,000.
Speaking on why the funding is happening outside of the big four African markets (Nigeria, South Africa, Egypt, and Kenya), the General Partner of Black Ostrich Ventures Ajani Windsor Areago said,
“If you look at the capital inflows into VC in Africa, the big four countries attract all the capital. But most exits do happen in these markets where it is currently funded. A lot of the Western VCs invest in Africa without having an exit strategy. There’s no IPO for you. What a lot of VCs in the West do not understand is that when a company reaches Series A in Africa, that’s an exit for someone who invested in the pre-seed.
“I’m speaking to a lot of the African VCs and they’re teaching us how to exit businesses on the continent. We will be working with founders in a very unusual way. We’re going to surround founders with growth experts and marketing experts to help them grow their businesses. It’s one thing to be great at starting a company, understanding the marketing aspect of the business is another.”
Black Ostrich Ventures further stated that it intends to concentrate its investments in venture-investable businesses and countries with promising exit opportunities. The firm hopes to leverage Windsor-Areago’s experience in the VC industry.
In addition to the first checks, the firm will offer a follow-on investment of up to $1 million if the company reaches Series. It is worth noting that Black Ostrich Ventures’ $20 Million Pre-seed and Seed-stage fund for African startups, is coming weeks after Founders Factory Africa announced the raise of $114 million to fund African startups.
African startups have continued to receive an increase in funding, which saw the continent raise a total of $123.4 million in July 2023. The trail was led by East Africa with startups in the region securing 37.5% of the funds raised in July.
However, the total funds raised was a 46.5% YoY decrease from the amount that was raised on the continent in July 2022.
Last month, July, was however a reflection of what the tides have been since H2 2022. The year 2023 has been slow following the funding market reset, which began in 2022. However, some regions, like East Africa and Central Africa, have continued to show promising signs with impressive fundraising by startups.
