In this edition of The Investor’s Corner, we caught up with Lexi Novitske, General Partner at Norrsken22—an African tech growth fund backed by over 30 unicorn founders including the founder of Klarna, Skype and Flutterwave.
Lexi discussed how travelling to Africa spurred her transition to venture capital (VC), her journey managing Singuliarity Investments and Acuity Partners, and her recent work at Norrsken22.
What were you doing before you broke into venture capital?
I started my career as an investment banker, and then as a New York-based hedge fund analyst. It’s been a long path from building models for publicly traded companies to investing in venture capital.
What motivated your transition?
A “short” trip to Africa.
Well, yes, but it wasn’t that simplistic. After the last global financial crisis, I took a sabbatical and travelled around Africa. This trip was eye-opening as it debunked my previously held misconceptions about Africa. I realized Africa had markets with incredible talent and interesting problems that the world didn't pay enough attention to. And, I knew solving these problems could translate to profitable and impactful investment opportunities.
I even extended the trip because it was such a powerful experience. It was during this extension I decided I'd like to spend the next phase of my career focusing on investments in Africa. However, I knew I couldn't invest successfully without understanding the cultural dynamics and nuances of African markets and their customers. I had to be on the ground.
So, I moved to Nigeria, Africa's largest and most diverse market with many untapped opportunities.
How was your experience settling in Nigeria?
It wasn't easy at first. But thankfully, I managed to navigate the culture with the help of people like Danladi Verheijei, one of the founding partners at Verod Capital.
He took me under his wing and taught me the dynamics of doing business in Nigeria. I had so much to learn, I hardly even left the country just to soak it all up.
Yes. There were a lot of things to learn and deals to close! And a year into the time I was also seeing something that was especially interesting - there was a new wave of founders building tech businesses with huge potential.
And investors were mostly not paying attention to these emerging startups. Local investors were sceptical about the possibility of tech succeeding in Africa. Foreign investors were concerned about risk factors like insecurity, political instability, and poor economic performance.
I thought they were missing something big, so I decided to set up one of the first VC firms in Nigeria. That was the start of Singularity Investments.
Given your lack of management experience at the time, how was your experience leading Singuliarity Investments?
It was interesting for sure - and I learned a lot from those years. And I learned a lot from the investments that didn’t work out. Probably more than from the ones that did. Being American, I was still looking at deals through my western lens and approached business without considering the market's reality.
Yes. We invested in a few ad-tech and media companies that struggled with either the appetite of consumers to pay or the barriers put in place by dominant telcos. This failure taught us lessons that guided our subsequent investment decisions.
Subsequently, we began to invest in digital identity, data insight, and payment infrastructure companies, leading to investments in companies like Flutterwave, Paystack, SmileID, and Migo.
Interesting. How long did you manage Singularity Investments?
Almost 6 years; but we transitioned the portfolio to Acuity Venture Partners and continued our work there through another Fund. Acuity backed over 25 companies. With learnings from our first fund, we expanded our mandate to cover many more African markets. In two years, we had seed and Series A investments in fast-growing startups like Mono, Bitnob, OnePipe, Indicina, mPharma, Brass. By the time we deployed our second fund, the industry had matured.
Thank you. However, our work was far from done as there was a huge gap in the growth stage.
Despite helping companies grow beyond the seed stage, the capital was simply not enough to help them scale. They needed partners that could help them secure the best customers, attract fine talent, and provide strategic expertise. And even though global VCs had become very attracted to the African growth story by this time, those investors just didn’t have the relationships or expertise to help support companies on that journey.
And that’s when Norrsken22 was formed. Our team joined forces with Niklas Adalberth, the co-founder of Klarna and the Norrskend Foundation, Hans Otterling, partner at Northzone, Natalie Kolbe and Ngetha Waithaka who had a long history working together at Actis. It was really two teams coming together with our relative strengths to build out what we believe is the best tech investment platform on the continent.
Amazing. What do you do at Norrsken22?
We back up disruptive tech businesses and provide deep industry insights and local perspectives to African founders to help them reach their potential at scale. We’re backing the next generation of Unicorns on the African continent
What are your investment criteria?
Typically, we prioritize companies - from Series A to C - with lean technology models, highly engaged customers, and compelling unit economics. These companies often fall in the subsectors of FinTech, Market Enablement, Medtech, and EdTech.
Given your experience in the ecosystem, what are some possible trends you see happening soon?
I think over the next couple of years we will see a lot of consolidation across sectors, but especially in fintech. I also predict some exciting opportunities in the B2B marketplace, retail, and supply chain. Additionally, I think many identity companies will scale massively. I see that likelihood strongly happening.
This isn't a prediction, but I hope someone finally solves an actual intercontinental cross-border payment solution that works and is affordable for the everyday consumer or trader.
You don't think any of the existing solutions have solved our cross-border payment challenges?
Absolutely! Indeed, there are lots of startups working hard to solve the problem, but none have been able to successfully overcome regulatory hiccups and allow seamless foreign transactions from Nigeria to Kenya for example. So yes, more cross-border payment solutions need to be created.
"The African tech ecosystem is doing a great job, considering how young we are compared to Silicon Valley." — Lexi Novistke
That's something to reflect about! What do you think about the African VC landscape?
We're doing a great job, considering how young we are compared to Silicon Valley. Nevertheless, there is a need for proper governance, checks and balances, and more female participation. There is still so much learning and unlearning to do.
I agree. As an investor interested in FinTech, what do you wish FinTech founders do differently?
I wish they do a better job training and empowering their middle management.
Due to the nature of startup building, most founders forget to delegate certain functions to their employees as they scale. This often spells disaster for their companies and even their own mental health. Anyway, as companies grow up, a founder with strong technical skills isn’t going to be the best one to manage the operations of a rapidly scaling team.
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