Africa's largest venture capital firm Enza Capital raises $58 million

65
4
Africa's largest venture capital firm Enza Capital raises $58 million

Enza Capital, a venture capital firm that supportes startups 'organizing offline online' and 'digitizing key African industries, has raised $58 million in two venture capital funds with a net worth exceeding $58 million.

The fund is still active and invests in fintech, logistics, health, human capital and climate tech companies. Enza Capital, which now declares itself a multi-stage investor due to its larger follow-on investments to Series B, is still focused on these industries in its second fund, launched this year.

Enza Capital's co-founder and managing partner, Mike Mompi, told TechCrunch that the company made 48 investments in 31 companies from both funds. These investments encompass 8 African nations, such as Kenya, Uganda, Nigeria, Ghana, Ivory Coast, Senegal, Egypt and South Africa.

The VC firm from Nairobi invests in guidewheel, a Kenyan climate tech startup that has expanded into the U.S. and Mexico following a Series A round by Greycroft. Shara, a Kenyan financial tech, is another. Enza Capital provided a pre-seed check to the company before it raised a yet-to-be-announced Series A round led by Index Ventures. The four-year-old firm also co-led a Series A investment in Ivorian fintech Djamo and Kenyan insurtech Turaco from its second fund.

Enza Capital's typical check size in its portfolio companies, including Autochek, Jumba, Craydel, Cloudline and SeamlessHR, ranges from $250,000 to $5 million, according to an Enza Capital spokeswoman, who spoke on condition of anonymity. It also has the opportunity to access more follow-on investments from Enza Growth Capital, an evergreen, later-stage investment vehicle that the firm launched last year, to invest up to $20 million per company.

re going in early and also follow-on in our companies. We have a growth fund, which is mostly a later-stage vehicle, where we can invest at any stage and co-invest with core funds in existing portfolio companies, thereby staying with our companies for a long time, he said.

Enza Capital's office is located in Nairobi, where its eight-person team works across the city, Johannesburg, London and New York. Motherpi said the firm might open offices in Lagos and in a Francophone African city to support its portfolio companies in those markets. The company will therefore employ more staff to work closely with these ventures across a variety of departments. Enza Capital has provided value in the technical department since its CTO-in-Residence assists startups' engineering and tech teams pre- and post-investment.

In a rather altruistic way, Enza Capital is launching its founder partner program, where founders and leaders of its portfolio companies become co-owners of the firm.

Enza Capital cites the program as a way of cementing trust and belief with founders, while commitment to building long-term and mutually beneficial relationships above and beyond traditional venture capital structures. The company is taking 10 percent of its carry pool and bringing it back to the founders. The call was made by mompi saying several factors, such as referrals to other businesses and the size of first check and follow-on investments, will determine how this carry is distributed among founders.

In the outside, this model demonstrates that venture capital firms are giving away free equity or money. But Lazar and his general partner, John Lazar, differ. They have their reasons, which can be summed up as aiming for better alignment with founders and being empathetic towards them.

Lazar's criticism was repeated by the president, who says she is based on Lazar's arguments. In contrast to some investors whose sole focus is to get outsized returns and fund-returning champions, Enza Capital also wants to leave something on the table for founders who don't succeed, given that 90% of startups fail.

The general partner, who dreams that this shared ownership model will become the norm in African venture capital investing, said: t a way of just commenting on that but doing it.

Following the same line of thinking about setting a precedent, mompi estimates that Enza Capital, one of the continent's largest funds, is not backed by typical African institutional investors, such as DFIs. As the African ecosystem evolves, the managing partner says that he wants to see future funds with DFIs and other traditional African LPs, as well as participation from more global endowments, foundations, and pension funds as the African ecosystem matures, but the fact that they didn't raise money from them for this fund shows that venture capital in Africa is becoming more mainstream.

The founding partners of Enza include private individuals, family offices and foundations, as well as a diverse group of investors, including private individuals, family offices and foundations to finance funds, hedge funds and venture capital funds.