TLcom Capital closes second fund at $154M to back startups across Africa
VENTURE capital activity in Africa has shown resilience over the past six months, with major firms backing startups on the continent closing their funds despite the ongoing funding winter.
In the latest development, TLcom Capital, an African VC firm with offices in Lagos and Nairobi and a focus on early-stage startups, has concluded fundraising for its second fund, TIDE Africa Fund II, totaling $154 million. The final close positions the firm as Africa’s largest investor across seed and Series A.
The oversubscribed fund, initially targeted to close at $150 million, attracted participation from over 20 limited partners. Notable investors include the European Investment Bank (EIB), Visa Foundation, Bertelsmann, and AfricaGrow, a joint venture between Allianz and DEG Impact.
This news comes two years and a few months after TLcom Capital announced the first close of the second fund at $70 million, matching the size of its first fund, TIDE Africa Fund I. While the broader slowdown affecting venture capital and startups globally contributed to the prolonged fundraising period, the VC firm can count a few positives, managing partner Maurizio Caio told TechCrunch in an interview.
Notably, TLcom Capital closed the second fund in a shorter timeframe than its preceding fund despite being twice its size. Caio attributes this to an improved understanding and acceptance of venture capital in Africa among limited partners as a legitimate asset class. Additionally, a portfolio of companies exemplifying the firm’s investment strategy played a pivotal role in garnering investor confidence and support.
Unlike many VC firms that progress from backing startups in pre-seed and seed stages to later-stage investments with subsequent funds, TLcom Capital maintains a consistent strategy. The firm continues to prioritize early-stage opportunities, particularly at the seed and Series A stages, while also considering opportunistic deals at growth and later stages. For example, the investor backed 10 out of the 11 companies from its first fund at seed or Series A. Yet, it has deployed capital in follow-on rounds at later stages across both funds (a Series C investment in Andela, a unicorn provider of global job placement for software developers, and partaking in a Series B extension round in FairMoney, a Nigerian digital bank.)
“We like to start early when the entrepreneur is raising seed or Series A and then to be with the entrepreneur along the journey and continue to invest if we think that the company deserves more capital deployed,” remarked Caio. “The reason is that we build our portfolio such that we back 20 to 25 companies that ‘if everything works out’ can return the fund individually.”