African VC LoftyInc Capital launches third fund for seed and Series A, reaches $43M first close | TechCrunch

One of Africa’s most active investors, known for early bets on unicorns like Flutterwave, Andela, and Wave, has secured fresh capital to invest in startups across the continent. This comes as funding deals and volumes in Africa saw only a slight dip last year, according to a report by VC firm Partech.

LoftyInc Capital, which primarily backed startups at the pre-seed and seed stages for over a decade, has reached the first close of its third fund, LoftyInc Alpha, at $43 million.

Unlike its earlier focus, this fund will target late-seed and Series A startups while retaining its geographical focus across Nigeria, Egypt, Kenya, and Francophone Africa, founder and managing partner Idris Ayo Bello told TechCrunch.

The first close attracted a diverse group of limited partners, including sovereign wealth funds from the Middle East and Africa, such as Egypt’s MSMEDA and Tunisia’s Anava Fund of Funds. Development finance institutions like FMO, Proparco (FISEA), AfricaGrow, IFC, and the U.S.-based First Close Partners also participated, alongside African high-net-worth individuals (HNIs) and European family offices.

Bello, who launched LoftyInc’s first investment vehicle in 2012, is one of the few investors to have witnessed Africa’s tech evolution firsthand. His firm has backed startups through various phases, from startup diversification beyond fintech and the rise of tech talent to the unicorn boom of 2021 and the current funding slowdown.

The pre-seed vehicle, run by an angel network that has since grown into a self-sustaining community of 250+ investors across Africa and the diaspora, laid the foundation for LoftyInc’s first structured venture fund five years later. 

In 2017, the Lagos-based venture capital firm raised its first institutional fund at $1.1 million, exclusively from HNIs and fully deployed in Nigeria. Bello, who launched the fund with Marsha Wulff and Michael Oluwagbemi, said it delivered a 5.7x DPI (cash return) to its investors, driven by exits and secondaries from Flutterwave and General Atlantic-backed healthtech startup Reliance Health.

By 2021, LoftyInc launched its second VC fund, initially targeting $10 million but closing at $14.2 million. This second fund expanded beyond its market scope outside Nigeria and took a pan-African approach, investing in startups across Egypt, South Africa, and Francophone Africa—markets where LoftyInc aims to remain active.

Among its investors was Meta, through its NPE team, marking the tech giant’s first and only investment in an African VC. 

Bridging the seed and Series A gap

With its third fund, LoftyInc is refining its investment strategy to tackle a significant challenge in Africa’s startup ecosystem: the low graduation rate from pre-seed to Series A. Africa’s VC landscape saw the steepest average ticket sizes decline at Series A (-18%) and Series B (-27%) last year, per the Partech report.

Bello notes that while LoftyInc’s angel networks and micro funds have helped cover pre-seed and seed rounds, the real funding gap emerges at the late-seed stage, where startups need structured support to scale and secure Series A capital. 

“At pre-seed and seed, there’s a lot of hype, but by Series A, the questions investors ask are very different,” he said. “Our goal is to come in at seed, but our mandate is to help you get to Series A. We want to be the firm that get startups over that hump.”

Positioning startups for Series A rounds where it plans to make follow-on investments and bring in co-investors will also strengthen the pipeline “opportunistically” for top-tier African investors at the Series A and growth stages, such as TLcom Capital, Partech, and Norrsken22. 

Bello says LoftyInc differentiates itself in the crowded early-stage investment market in Africa by leveraging its partners’ operational expertise and networks. With over 200 investments and 14 exits, the managing partner posits that the firm provides more than capital, offering market access, business development support, and investor matchmaking to its portfolio companies.

LoftyInc has expanded its leadership team with its latest fund to keep up with its evolving strategy and growing portfolio, an important move for regional expertise and execution as it invests in startups that require localized support.

Over the past two years, the firm added Mariam Kamel and Kevin Simmons as general partners. They will apply their investment banking, angel investing, and operational VC experience across the Middle East and Africa to help deepen the firm’s presence in Africa’s east, north, and Francophone regions (where at least 30% of the fund will be deployed).

“They bring in fund and investor experience, which ties into our geographical expansion and exit plans,” Bello said, adding that Oluwagbemi and Wulff will continue managing LoftyInc’s previous funds while supporting the transition into this larger, more structured fund.

LoftyInc Alpha says it’s backing innovations that drive Africa’s “everyday economy.” Most of that will revolve around financial services, which remains the most dominant sector in African tech, accounting for 60% of the over $2 billion in equity deals startups raised last year; logistics and transport; healthtech; retail; climate; and deep tech and AI where they apply as enablers across the other sectors. 

The firm’s portfolio spans notable startups, including Uber-backed vehicle financing platform Moove, Egypt’s Robinhood-style trading app Thndr, and African B2B e-commerce platform OmniRetail.