African technology companies and startups are becoming increasingly attractive to international investors, which is why ignoring them falls into the category of inappropriate and short-sighted decisions.
Lexi Novitske, general partner of Norrsken22, a $205 million fund focused on Africa, says that some investors are already considering large financial injections into businesses in the mentioned region. She noted that the corresponding tendency became more noticeable in the first quarter of the current year.
Lexi Novitske says that the specified investor interest is because they see many of the African companies are healthier than in their own market. She made the corresponding statement during a conversation with representatives of the media.
The expected investments are likely to be a factor of some relief for African technology companies and startups after a sharp decrease in venture capital inflows last year. In 2023, the mentioned figure was $4.5 billion, which is 31% less than in 2022. The relevant information was released by the African Private Capital Association, which is based in London. The negative dynamic of venture capital inflows to the continent is because investors have begun to reduce interaction with local economies which are faced with such negative realities as high inflation and weakening national currencies.
Lexi Novitske says that the fact that African companies continue to develop high-quality functional platforms in difficult conditions is exciting for international investors. She expects that soon the volume of financial injections into firms based on the continent will exceed the level observed before 2020. At the same time, in her opinion, the corresponding indicator still will not reach the levels of 2021-2022, when many hasty investment decisions were made against the background of the end of the coronavirus pandemic.
Lexi Novitske suggests that investors will return to Africa. Also, in her opinion, decisions on financial injections will be made with a lot more due diligence. Moreover, she hopes that investors will be more involved in the activities of companies and with a much more reasonable valuation.
Lexi Novitske said that Norrsken22 has already invested in six African companies, including neobank Tyme Group, and has three other investments in the pipeline. She also noted that the fund plans to increase the mentioned indicator to 20 firms by the end of 2025.
Norrsken22 was established in 2022 and is a joint initiative of Hans Otterling, a partner at Northzone Ventures, and Niklas Adalberth’s Norrsken Foundation. In this case, the purpose of the activity is to provide support to companies that offer solutions based on lean technologies, including web platforms, software, and artificial intelligence. Among the fund’s backers are 30 founders of the so-called unicorns, companies that have reached a pre-market valuation of at least $1 billion. Norrsken22 invests in Egypt, Nigeria, Kenya, and South Africa.
Lexi Novitske says that the fund pays a lot of attention to digital payments and neobanks in Francophone West Africa as a market. According to her, in the past, this indicator was low and showed slow growth rates.
Also, according to Lexi Novitske, there is currently a regulation shift in Africa that will significantly accelerate the adoption of digital technologies in the next five years.
As we have reported earlier, Ethiopian Eco Startup Kubik Gets Fresh Funding for Pan-African Growth.
