Partech closes first-of-its-kind, largest Africa-focused fund at €245 million.

Partech, a global VC firm with several funds and support for tech and digital companies, has reached its first close of Partech Africa II at €245 million (~$263 million), making it the largest Africa-focused fund yet. 

The firm, which focuses on early- and growth-stage startups across the continent, intended to raise about €230 million (~$250 million) for its second African fund and reach a first close at €150 million, according to general partners Tidjane Deme and Cyril Collon.

The company, however, closed above the stated target for the entire fund at first close due to the overwhelming interest from LPs. Additionally, according to one of its partners, Deme, the African fund would now aim to reach a final closing of no more than €280 million (about $300 million).

He said:

“Last year, we went out to raise fund two, and we did it in a very different market. Everything has changed; the deal flow in Africa, especially for Series A and B, has been multiplied by 14 over the last five years,”

Tidjane Deme from the firm’s Dakar office.

“The average Series A ticket sizes have grown from $4 million to almost $9 million, and Series B has gone from about $10 million to $25 million. So the market has changed, and we embarked on raising fund two; the strategy is to double down on what we did with fund one because the market has validated it.” 

Limited partners in its Fund II come from various industries, including HNIs, family offices, DFIs, corporates, African funds, and anchor investor KfW, the German Development Bank.

The International Finance Corporation (IFC), South Suez, FMO, Bertelsmann, European Investment Bank (EIB), British International Investment (BII), Deutsche Investitions- und Entwicklungsgesellschaft mbH (DEG), and Proparco are some additional existing and emerging LPs.

“Investors that weren’t ready to commit with Fund I participated in Fund II,” noted Collon on Partech’s fundraising activity with LPs over the years. “That’s a powerful signal to have development financial institutions and other investors come in, and existing ones double down.”

Partech Africa II is one of three funds the global venture capital firm has launched in the last two years, including a $750 million growth fund and a $100 million seed fund, which target various markets and industries globally. It’s also a sequel to Partech Africa I, the first fund announced in 2018 and closed at $143 million. 

Read also: Global VC Firm, Partech closes €120m fourth seed funding round

More about Partech Africa II

Partech in 2021 more than doubled its Africa fund from $70 million in the previous year to $143M, making it the largest VC fund dedicated to Africa’s tech startups by a top-tier international VC.

Its first African fund made Series A and B investments in 17 firms operating in nine nations. Deme claims that the fund’s purpose was to support certain firms that were pursuing highly fragmented, unorganized, and deep economic sectors in Africa “with many inefficiencies where adding a tech platform with strong operations might construct something that provides a lot of value.”

These startups benefit from expanding consumer and commercial demand and easier access to digital infrastructure. Over a million merchants and 20 million end consumers on the continent have benefited from Partech Africa’s portfolio, the company claims.

“We do invest in late-seed. So when we say $1 million, it’s also because we can go earlier. Also, we will keep working on ensuring that we can preempt talented teams very early on and not necessarily wait till they are fundraising,” Collon said from the VC firm’s Dubai office. “Connecting with the market and entrepreneurs as we have done with fund I is essential for fund II’s success.”

From a VC point of view, Partech says its startups have attracted more than 10% of the investment that has flowed into the continent between 2021 and 2022. The venture capital firm also boasts a high-profile exit and unicorn among its ranks: WorldRemit subsidiary Sendwave and Stripe-backed Wave (a spinoff from Sendwave).

Before Partech stepped in to assist in fine-tuning their business and operational models with funding and other value-adds, most of these companies had already achieved product-market fit.

It’s also important to note that Partech Africa contacted most founders, or vice versa, years before the firms were prepared to accept any investment. By building these connections, the investor could lead rounds with payments ranging from $1 million to $7 million.

Partech Africa will continue to follow this action plan for the second fund. The venture capital company still intends to support Series A and B businesses in various industries, including fintech, health tech, logistics, mobility, and edtech. It is tripling the upper end of its ticket size to $15 million.

Read also: Global VC Firm, Partech Doubles its Africa Fund to $143 Million, Establishes East Africa Presence

The firm intends to deploy its capital in more than 20 startups from Fund II. It’s one of the most significant Africa-focused growth-stage funds, including TLcom Capital, Norrsken22, Algebra Ventures, and Novastar Ventures. 

The group, which has offices in Dakar, Nairobi, and Dubai, is growing, and one of these new places in Lagos. Additionally, Partech’s strong global platform, which supports vital operations, including business growth and portfolio assistance, founders community, ESG, finance, compliance, and legal, enhances its operations.

Venture capital activity has increased in several multiples between then and now. This year, African startups raised over $5 billion — or $6.5 billion, including debt financing — compared to the $1.16 billion recorded in 2018. This highlights how far the tech ecosystem has come, and Partech’s new fund corresponds to that growth, the partners told TechCrunch in an interview.