BusinessDay

TLcom secures first close of $150m fund to invest in African tech companies

TLcom, an Africa-focused venture capital firm has secured the first close of $70 million for its $150 million tech fund dedicated to companies in Africa andd putting it insight to becoming the largest independent venture firm.

Launched in 1999, TLcom currently has in excess of $350 million worth of funds under management across primary and secondary funds. It also boasts 12 diversified portfolios of tech companies on the continent including Andela, Ajua, Autochek, Ilara Health, Kobo360, Okra, Pula, Seamless HR, Shara, Terragon Group, Twiga Foods, and uLesson.

Participants in its latest funding include Allianz, the world’s largest insurance company, through AfricaGlow, its joint venture with DEG Impact (German Investment Corporation), as well as a host of new and returning investors including Bertelsmann, King Philanthropies, the TLcom team, and FBNQuest from the private sector, and major DFIs such as CDC Group (the UK’s development finance institution), IFC, Proparco and Swedfund. A second close of the fund is expected later in 2022.

“Since the closing of our previous fund, African tech has secured more high-value financing rounds, exits, and M&As than ever before and this is only just the beginning,” Maurizio Caio, Nairobi-based Founder and managing director at TLcom. “It is becoming increasingly evident that our sector has broken into a new era of maturity driven by very strong business fundamentals that African founders are demonstrating not only in the fintech space but across a huge number of the continent’s largely underserved markets.”

TLcom plans to use the new fund to expand its existing focus on fast-growth, tech-enabled African startups to Egypt, as well as strengthen its long-standing presence across East and West Africa. The company is hoping to bring an additional 20 early-stage startups to its portfolio with an emphasis on Seed and Series A stages. It will also target entrepreneurs tackling some of Africa’s most complex challenges in sectors including fintech, mobility, agriculture, healthcare, education, and eCommerce. The ticket size ranges from $500,000 to $15 million.

Read also: Emerging Africa Group sees tech, media, communication attracting new investment in 2022

In 2020, TLcom closed a $71 million fund for its TIDE Africa Fund with which it pledged to invest in 12 tech companies. According to the company, the startups that benefitted from the TIDE Africa Fund have since recorded huge traction with total revenues across its portfolio growing three times since investment. The investments have also generated over 2,300 jobs and significant up-rounds secured with participation from top global investors including Softbank, Owl Ventures, and Index Ventures.

TLcom’s portfolio companies have so far raised more than half a billion dollars of capital in addition to funding issued by the TIDE Africa Fund. On average, new investments secured from these startups were priced at 5x the valuation of the initial investment received from TLcom. In 2021, the investor also announced the first unicorn in its portfolio following Andela’s $200mn Series E funding at a valuation of $1.5bn.

“We are excited to expand our partnership with TLcom. The fund’s focus on business fundamentals coupled with deep understanding of local context has been instrumental in identifying market shaping businesses and innovative entrepreneurs in Africa,” said Abhinav Sinha, Director and Head of Technology and Telecom at CDC. “We are confident that our continued relationship will further amplify TLcom’s ambitions to accelerate impact to consumers and businesses across Africa’s diverse markets.”

Apart from expanding its portfolios, Caio said TLcom also intend to prioritise increasing the gender pool by funding female entrepreneurs

Martin Ewald, lead Portfolio Manager Impact Investments, AfricaGrow/Allianz Global Investors said much more is possible in terms of deployment of capital into the continent in the VC.

“There is considerable upside for everyone if investment activities accelerate even more. African businesses can boost productivity, gain in terms of competitiveness and technological edge and tens of millions more African could gain stable employment while generating returns for investors,” Ewald said.

TLcom is led by a highly experienced and growing team, 50 percent of which are females holding senior positions. The team include Omobola Johnson, Senior Partner, based in Nigeria, Andreata Muforo, Partner in Kenya, Ido Sun, Partner in the UK. The company’s offices are located in Kenya, Nigeria, as well as the United Kingdom (UK).

“Our decision to back TLcom on its second fund was based on the fund manager’s demonstrated track record of investing in high growth tech companies with strong business fundamentals and implementing value creation strategies that improve the operations and profitability of these companies. We remain confident that TLcom is well-positioned to continue to deliver on our shared objective to provide capital, the required operational support, and access to international partnerships to technology companies in the Africa region through the TIDE Africa Fund II. At FBNQuest Funds, we recognize the transformational role that technology must play in narrowing the gap between industries in Africa and the rest of the world, and we are keen to play a pivotal role in enabling this growth,” said Ijeoma Agboti, Managing Director at FBNQuest Funds.

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