Often times, African startup founders cite access to funding among the top challenges they face when trying to bring their ideas to life. Yet, over time, the African continent is seeing more and more investors willing to back startups headquartered or focused on the continent.
Last year, according to CrunchBase data, there were at least 50 Africa-focused VCs. However, the article from TechCrunch also noted the growing number of local micro VCs.
As the name suggests, micro VCs are relatively small in size and also write relatively small ticket sizes usually ranging from $50,000 to $1 million. The primary objective for these is to “clean up” really early-stage startups and create a deal pipeline for early venture or late venture investors.
In Africa, there’s been a growing number of these micro VC’s with the most notable ones being Microtraction and Ventures Platform. The two, in the past 12 months, have been extremely active with a combined total of 15 investments.
Saviu Ventures, a Mauritius-incorporated micro venture capital firm, launched in 2017 with the aim of bridging the gap that exists when it comes to African startups ready to absorb Series A funding.
“This is our value proposition: we want to help entrepreneurs reach series A but also provide later-stage funds access a qualified deal flow of startups that have gone through our methods and our care,” said Arthur Thuet, co-founder and Managing Partner at Saviu Ventures.
Arthur started Saviu Ventures with Benoit Delestre as a way to help African startups not only raise funding but also put a couple of structures in place during their first months of existence. They chose to create a micro-VC structure because they knew there was a real need and that their combined experiences would be highly valuable for young entrepreneurs.
“We have more of an entrepreneurial background which is an asset when investing in young startups who face many issues that require quick and efficient answers”, Arthur pointed out.
Unlike other investors that are set out on the onset to build a VC firm, Saviu Ventures was launched in a somewhat unorthodox way.
In 2015, Arthur joined Jumia Group in Kenya where he worked as an intern in the logistics department. It was from here that he says he was able to understand the innings and workings of a startup, especially one that has operations across Africa.
“I was involved in logistics and operations [at Jumia] which I think still helps me a lot right now with the startups that we are working with, especially as we are building a strong vertical in transportation”, Arthur says.
After quitting Jumia Group and a few other tech-related experiences in Africa, he launched Saviu by making two seed Agtech investments and co-creating a logistics startup in Ivory Coast with Délas N’dri - Kamtar - a platform that connects informal truck drivers with expeditors and develops a network of pick-up stations for parcels throughout the country.
This was a way to lay a ground for Arthur and Benoit to see how the entire process of starting and building a successful startup in Africa works. “For us, this was some kind of pilot phase to show potential investors that we actually knew how to start a startup on the continent, how to help it improve overall, increase revenue and take it to the next level”.
It did not take long before they convinced new investors that they could replicate their first experiences with other startups.“ We raised additional funding from a Mauritian private equity fund and entrepreneurs from Europe and Africa to grow the portfolio to 10 companies in both French-speaking and English-speaking Africa”, Arthur explains.
Instead of raising a fund and then look around for the startups to inject it into, the pair decided to go forth with an open-ended fund that is dependent on a supply-driven approach which gives them the agility and flexibility they are looking for.
In the past year, Saviu Ventures has made 8 investments for a total amount of $3.5 million. 5 of these investments - which represent $2 million of the total capital deployed - happened in the last four months. The tickets have ranged anywhere from $50.000 to $850.000.
Their current portfolio includes companies like Talent2Africa, a human resources startup specialised in recruitment and sourcing for talent as well as Afrikrea.com, a fashion startup based in Abidjan, Ivory Coast which provides a platform that one can use to discover, buy and sell Made Of Africa fashion, art and crafts from all over the world.
Although Arthur maintains that they have their eyes fixated on sub-Saharan Africa, he points out that they have a soft spot for those in Francophone Africa, which makes sense given that both co-founders hail from France.
“English-speaking Africa is full of ambitious entrepreneurs and talented investors, it is an exciting and crowded market where we, as investors, must have a footprint. The Venture Capital scene in French-speaking Africa is a bit young but catching up quickly, this is why we see it as a great opportunity”.
As entrepreneurs and investors in francophone Africa, Arthur and Benoit are looking forward to the day these countries will have the same level of digital vibrancy. “The ecosystem is becoming more and more exciting, and investors will start looking at those countries more carefully”, says Arthur.
According to Arthur, ever since they launched, they have been inspired to actually get bigger. “We have excellent feedback from the market,” he says. “Whether it is from entrepreneurs who are happy to see more seed investors who provide operational assistance on the market or series A investors who know this will be a good thing for their deal flow, we have the feeling that we are doing something relevant”.