Africa-focused venture capital company, TLcom Capital is looking to raise $150 million for its second round of investment funding, which will target early and late-stage tech companies.
According to a Techcrunch report, the company, known for its investment in Africa’s Unicorn Andela and Twiga, has reached its first close of $70 million. This is roughly the same amount it raised in its first fund, the TIDE Africa Fund, which closed in 2017 and was concluded in February 2020.
Managing partner, Maurizio Caio, reiterates that the second fund is likely to close later this year and It will be the VC’s largest fundraising to date when it does.
The funding will position the investor to become one of the continent’s leading independent venture capital companies.
The TIDE Africa Fund
The TIDE Africa Fund, which the firm closed in 2020, was aimed at investing in 12 African companies from seed through Series B.
The company eventually invested in 11 companies. Companies like Andela, Ajua, Autochek, Ilara Health, Kobo360, Okra, Pula, Shara, Terragon Group, Twiga, and U Lessons were among the beneficiaries.
VCs typically invest for five years, then conduct follow-on rounds for another five years before selling their portfolio firms via acquisition or IPO. However, TLcom Capital’s capital deployment took three and a half years, from late 2017 to mid-2021. This is an impressive feat.
“The precise reason we stopped investing was that we were attempting to figure out how much cash we’d need to support these firms in full-on rounds moving ahead,” Caio explained. “So, we chose not to invest in another firm only to reach a dozen companies without having adequate resources for follow-on rounds.
$6 million average investment
TLcom’s average investment per company is roughly $6 million. However, it hasn’t invested exactly that amount in any of its portfolio firms in a new or follow-on round.
Andela’s $40 million Series C, which closed before TLcom’s first fund closed in 2020, was the most recent stage in which TLcom invested in. Twiga’s $20 million Series B in 2019 was another. The other nine investments the company made were made at the seed and Series A stages.
According to the company, in certain circumstances, it had to invest sooner, which is unusual for huge funds in Africa. The company had backed Okra and Shara when they were just prototypes. it also led Autochek’s pre-seed round.
TLcom’s decisions to lead smaller rounds demonstrate the increasing aggressiveness with which investors are competing for transactions these days.
The competition in Africa’s venture capital sector is heating up, with local investors like LoftyInc and Ventures Platform having large funds to invest exceptionally early, and global investors like Tiger Global and Target Global making inroads from pre-seed through Series C.
Its portfolio to include 20 early-stage companies.
TLcom, which comprises Managing Partner, Maurizio Caio, Senior Partner, Omobola Johnson, and Partners, Ido Sum and Andreata Muforo, intends to add an additional 20 early-stage companies to its portfolio. These firms’ ticket amounts will vary from $500,000 to $15 million.
According to the company, the funding structure will most likely be similar to its first: a portion of the funds will go to early-stage businesses, while the remainder will go to new or follow-on rounds of firms in the growth and late stages.
The current portfolio firms of TLcom are all headquartered in Nigeria or Kenya. But now, TLcom intends to expand its focus to Egypt with its new fund, as well as make additional investments in East and West Africa.
The company also has a couple of local limited partners, as do other pan-African funds: FBN Quest and Sango Capital.
“In this initial round of investors, we have two African limited partnerships returning with greater cash than before. However, more effort needs to be made in order to attract additional African investors. However, the essential point is that the capital market is realizing that African venture capital is a compelling investment opportunity. And the fact that more individual investors are becoming aware of this, despite the lack of any institutional constraints, is encouraging.Maurizio Ciao
Traditional industries such as financial services, mobility, agribusiness, healthcare, education, and e-commerce are the company’s primary emphasis.
However, the business is eager to invest in web3, crypto, and DeFi firms, which are younger areas with a lot of upsides and put African entrepreneurs on a level playing field with other regions.
In 2021, African companies raised over $4 billion, more than twice the amount raised when TLcom’s first fund closed.
The company, however, encourages innovators to take advantage of the fresh flood of finance flowing into the continent and attain tremendous size as a result of this increased activity.
“Despite generating over $5 billion in African venture capital, the broader picture is that we are still extremely early in the game.” This is the message to entrepreneurs: “Think large, don’t second-guess yourself, and focus on the scale of the opportunity,” he added. “If it’s compelling, you’ll find financing to back it.”
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