How Verod-Kepple Africa wants to invest its $60 million fund

A few days ago, Verod-Kepple Africa Ventures, a pan-African VC firm, secured $60 million for its first fund. Existing Japanese investors like SBI Holdings and Toyota Tsusho Corporation were joined by newcomers including Nigerian firm SCM Capital (formerly Sterling Capital Markets Limited) and additional Japanese institutions like Taiyo Holdings and C2C Global Education Japan.

The fund will target African startups at Series A and B stages. This focus comes amidst a decline in growth-stage investments in 2023, and even the first quarter of this year. “The notable drop in growth-stage funding across the continent is largely due to the dependence on foreign investors for capital infusion,” according to Marge Ntambi, a venture partner at Benue Capital.

“We think there’s still a need for more growth-stage capital with locally based investors,” said Ory Okolloh, partner at Verod-Kepple. “Over the last few years, we have seen a growth in pre-seed and seed funds, and we felt there are not enough funds at the growth stage of investing to get these companies to the next level in terms of scale, exits or even being around as sustainable profitable businesses.”

“Our focus is Series A and B but we have the ability to go earlier to pre-Series A if we think it is a good opportunity. We think there’s still a need for more growth-stage capital with locally based investors,” Okolloh added.

Verod-Kepple also said the fund would invest in three key themes: African companies building digital infrastructure across sectors; inefficiency solvers who are solving for friction primarily between B2B or B2C basis; and market creators who are creating economic opportunities for people, based on the changing dynamics of the overall African economy and demographics.

The VC firm invests between $1 million and $3 million. They've already deployed $17.5 million, averaging $1.5 million each, in 12 companies across Nigeria, Egypt, Kenya, Morocco, Ivory Coast and South Africa. These investments span various sectors including fintech, mobility, e-commerce, and healthcare, with examples like Moove Africa and KOKO Networks.

According to Okolloh, Verod-Kepple Africa seeks to back startups beyond established African tech hubs, thereby exploring innovations in emerging markets like Angola, Zambia, DRC, and Tunisia. “Given the diversity of markets, shifting macros, markets that are underserved in terms of investors, we think taking a pan-African and a sector-agnostic approach is important,” he said.

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