A significant injection of $43 million has been secured by LoftyInc Capital, marking the initial close of their third fund, LoftyInc Alpha.
According to reports, this funding is strategically designed to propel late-seed and Series A startups across Africa, addressing a crucial gap in the continent’s venture capital landscape.
LoftyInc Capital, a prominent investment firm with over a decade of experience nurturing early-stage ventures, noted it is shifting its focus to late-seed and Series A stages.
This pivot comes amidst observations from VC firm Partech, which highlighted a slight decrease in African funding deals and volumes over the past year, and a significant reduction in average ticket sizes at Series A (-18%) and Series B (-27%) levels.
“At pre-seed and seed, there’s a lot of hype, but by Series A, the questions investors ask are very different. Our goal is to come in at seed, but our mandate is to help you get to Series A. We want to be the firm that gets startups over that hump,” stated Idris Ayo Bello, founder and managing partner of LoftyInc, who began the firm’s first investment vehicle in 2012.
The LoftyInc Alpha fund has attracted a diverse group of limited partners, including sovereign wealth funds from the Middle East and Africa, such as Egypt’s MSMEDA and Tunisia’s Anava Fund of Funds.
Development finance institutions like FMO, Proparco (FISEA), AfricaGrow, the International Finance Corporation (IFC), and U.S.-based First Close Partners also participated, alongside high-net-worth individuals from Africa and family offices from Europe.
LoftyInc’s journey began with an angel network, evolving into a community of over 250 investors across Africa and the diaspora.
In 2017, the Lagos-based firm launched its first institutional fund, raising $1.1 million exclusively from HNIs, which yielded a 5.7x DPI (distributions to paid-in capital) through successful exits and secondary sales from companies like Flutterwave and Reliance Health.
By 2021, LoftyInc’s second VC fund closed at $14.2 million, surpassing its initial $10 million target. This fund expanded its geographical reach beyond Nigeria, including Egypt, South Africa, and Francophone Africa, with Meta joining as an investor via its New Product Experimentation (NPE) team, marking Meta’s first and only investment in an African venture capital fund.
Mr Bello emphasized the need to bridge the funding gap between seed and Series A, aiming to improve the graduation rate of startups.
The VC firm plans to make follow-on investments and collaborate with co-investors, including firms like TLcom Capital, Partech, and Norrsken22.
With over 200 investments and 14 exits, LoftyInc aims to provide more than capital, offering market access, business development support, and investor matchmaking.
The firm has strengthened its leadership team with Mariam Kamel and Kevin Simmons as general partners, enhancing its presence in East, North, and Francophone Africa, where at least 30% of the fund will be deployed.
“They bring in fund and investor experience, which ties into our geographical expansion and exit plans,” Mr Bello remarked, noting that Michael Oluwagbemi and Marsha Wulff will continue to manage previous funds.L
LoftyInc Alpha stated it will focus on innovations driving Africa’s “everyday economy,” with a particular emphasis on financial services, which accounted for 60% of the over $2 billion in equity deals raised by African startups last year.
Other key sectors include logistics and transport, health tech, retail, climate, and deep tech and AI.
Notable portfolio companies include Moove, Thndr, and OmniRetail.
