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.