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US investor Endeavor Catalyst plans to increase its investments in Africa over the next half decade, potentially doubling the share of African startups in its portfolio.
The New York-based venture capital firm with over half a billion dollars in assets has made 40 investments in Africa since 2017, notably in South Africa’s Tymebank, and Nigeria’s Flutterwave and Moniepoint — all three of which are billion-dollar companies, or unicorns. About 8% of its global investments are in Africa, but executives expect that share to rise as digital adoption and tech talent grow on the continent.
“We are going to be doing a lot more investing here because this is where growth is coming from,” Allen Taylor, a founding Endeavor Catalyst partner who manages the fund, told Semafor on a recent visit to Nigeria. He predicts the share of African startups in the firm’s portfolio “will probably double” over the next five to seven years.
Two years ago, the firm landed its first Africa exit, having been an investor in Tunisia-born artificial intelligence startup InstaDeep that was acquired by German vaccine maker BioNTech for $682 million. Last year, it invested in Zededa, an AI business founded by Moroccans, on the belief that AI will become “a ubiquitous thing that is a tech layer within almost every company,” Taylor said.
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Endeavor Catalyst is among a number of Silicon Valley investors that have driven the rise of Africa’s startup ecosystem in the last decade, by writing million-dollar checks that are often not possible for local venture capital funds. It invests up to $2 million in companies whose founders are members of its Endeavor network — an invite-only global startup founders club of sorts — and will begin raising capital for a new fund of up to $350 million later this year.
Africa investment from US startup investors has slowed recently, leading to a drop in funding totals in consecutive years. But the largest round by an African startup so far this year — the $53 million raised by Nigeria-born remittances startup LemFi — involved investors from the US, including Endeavor Catalyst. The last quarter of 2024 was the firm’s third-most active in terms of deploying capital, according to its annual report.
A quarter of its Africa investments are in fintech with another quarter in consumer tech, said Michele Wanjiku, who leads Endeavor Catalyst’s Africa operations. She expects that they will invest in more businesses that offer software-as-a-service models as the ecosystem develops in the future.
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The firm’s outlook comes as African startups hope for favorable economic climates in which to do business, following a few turbulent years that have led to the death of some of the region’s most promising ventures.
In Nigeria, for example, stronger GDP growth in 2024 and slower inflation so far this year have been welcomed by business owners as signals of light at the end of a tunnel.
“It was bad last year, very bad and a lot of entrepreneurs were quite open about it,” said Ireayo Oladunjoye, Endeavor’s managing director for Nigeria who advises over a dozen startups that are part of the network. “Many are now coming out of the valley and they can see stability in our economy” she said.
Notable
- Antler, a Singaporean startup venture firm, will begin investing in Nigerian startups this year, marking its second presence in an African country after Kenya. It was one of the top five active venture capitalists last year, according to startup deals tracker Pitchbook.