4Di Capital, Mauritian conglomerate IBL to drive expansion into Africa – New Business Ethiopia
4Di Capital, a South African venture capital firm at the early stages of its development, and IBL, a Mauritian conglomerate, announced today that they had closed the second round of their new US$ 25,000,000 seed fund.
The new fund will be created in partnership with DotExe Ventures Mauritius. An undisclosed raise was made by IBL Group, a Mauritian-based conglomerate via its investment vehicle, IBL Link Investments Ltd. The announcement establishes an intimate working relationship between the three organizations, and creates a new presence on Mauritius for venture capital firm IBL Link Investments Ltd.
This follows a US$ 8 million initial close from the SA SME Fund. Capital is targeted at seed and post-seed stages startups in South Africa, East Africa and the continent. The fund will be open to new investors and will continue to be available until the end of 2023.
Founded in 2009 by a team of entrepreneurs, 4Di Capital has established itself as a highly regarded investor in the African venture capital market, with investees benefiting from the partner’s significant hands-on experience in growing and scaling startups in Africa. This is backed by the firm’s portfolio of seed investments into noteworthy startups that have since raised significant late-stage funding, such as Aerobotics, LifeQ, VALR, and Nairobi-based Wasoko (formerly Sokowatch, which recently announced a successful US$ 125 million fundraising round at a US$ 625 million valuation).
Says Justin Stanford, Partner at 4Di Capital: “It is with great excitement that we welcome IBL Group and IBL Link Investments Ltd to our investor base. A key feature of our firm’s approach is that we prefer to have fewer investors and work very closely together with them, maximizing value-add and providing a close look at the coalface. After spending the past 13 years refining the investment strategy and expanding beyond South Africa into the East African market, we are excited to work with our new partners. IBL features a network of more than 280 companies across 19 markets which will be invaluable as we continue our efforts to support the growth and development of the next cohort of highly scalable startups in the region.”
The partnership between 4Di Capital and IBL comes as venture capital establishes itself as a promising asset class on the African continent: In the first quarter of 2022 – while markets in the United States, Asia and Europe slumped – Africa was the only region globally to record three-digit growth, with venture funding growing by 150% year-one-year to hit a record US$ 1.8 billion compared to US$ 730 million in the same period in 2021. The attractiveness of the East African markets was also demonstrated by Kenya, which at the end of Q1 2022 had attracted US$ 482 million in venture capital funding, compared to US$ 412 million in 2021.
“With Africa showing the rest of the world up, now is the right time for investors to get into the African innovation market,” adds Stanford. “The early-stage investment landscape is even more enticing. Although the supply of funding is increasing rapidly on an annual basis there is still a significant capital gap and under-served demand. Investors still have an opportunity in Africa, unlike other global markets that are saturated. The investment landscape is less competitive, resulting in more favourable valuations and terms, and thus the opportunity to potentially achieve higher returns.”
Commenting on the partnership, Laurent Fayolle, Managing Director of DotExe Ventures, says: “At the core of our business is a desire to elevate the African innovation ecosystem. We must be willing to provide capital and resources to help founders who are bold and can create both scale and value. IBL has built over the years great partnerships with like-minded organisations and, to this end, 4Di Capital is a perfect fit, bringing over a decades’ worth of investment experience and expertise, to help broaden our footprint in East Africa and the wider continent too.”