Pan-African contrarian investor P1 Ventures reaches $25M first shut for its second fund

Pan-African enterprise capital agency P1 Ventures has reached the primary shut of its second fund at $25 million. The enterprise capital agency secured this capital from a few of Africa’s largest industrial conglomerates and personal firms, a number of fund of funds and basic companions of world funds primarily based within the U.S. and Europe.

P1 Ventures expects to achieve a remaining shut by early subsequent yr, founder and basic accomplice Mikael Hajjar advised Information World in an interview.

Hajjar launched P1 Ventures in 2020 with Hisham Halbouny, who additionally serves as a basic accomplice. Its first fund (a proof of idea fund as Hajjar calls it) allotted $11 million to 24 ventures, primarily concentrating on e-commerce, fintech, insurtech, well being tech, and SaaS industries.

Whereas this second fund (its first institutional fund) will nonetheless give attention to these sectors, the agency is including AI to the combo. Its first funding on this class is Senegalese startup Nkoloso.ai, which gathers information and retains observe of huge tracts of agricultural land utilizing satellite tv for pc imagery and AI. It’s additionally one in every of 5 startups the San Francisco–primarily based enterprise capital agency has backed from its second fund.

Hajjar argues that using AI by the agency within the agriculture and fast-moving client items (FMCG) sectors exemplifies Africa’s potential to leverage this rising expertise to bypass conventional infrastructure, just like the best way cell cash in Africa surpassed the necessity for debit and bank card infra. Moreover, AI demonstrates how African firms could develop merchandise with international attain.

“We consider that AI can be Africa’s subsequent huge leapfrog alternative. So once you assume how fintech remodeled the continent and allowed it to disrupt the banking sector, we consider AI will do the identical with sectors like retail, healthcare, and the inventive economic system,” stated the final accomplice.

“What we see stunning in AI is the flexibility to export. As you realize, single market and forex danger are the primary dangers in investing in Africa. The great thing about AI is that you’ve export-first companies.” Hajjar cited Egypt-born Instabug, an organization he minimize an angel verify to, and BioNTech-subsidiary InstaDeep as examples of such African-founded software program and AI companies with prospects within the U.S., Europe and globally.

P1 Ventures lately started an Entrepreneur In Residence program, underneath which Nkoloso.ai acquired funding. Each companions make the most of their expertise and experience as previous operators to handle this enterprise studio, which plans to incubate 4 extra startups within the subsequent 4 years headed by founders able to reaching product-market match and scaling the product.

In the course of the interview, Hajjar proudly highlights his agency’s “contrarian” method to (VC) funding in Africa. “We go off the crushed path and again the underdogs; we make investments the place nobody else does,” he says, underscoring tremendous early investments made out of P1 Ventures’ first fund in startups working inside Francophone Africa markets, together with Yassir, a mobility startup-turned-super app in Algeria; Chari, a B2B e-commerce platform in Morocco; and Djamo, a funds startup within the Ivory Coast. These upstarts have emerged as essentially the most well-funded startups of their respective nations. Notably, Yassir, the agency’s first funding, stands out as one of the vital worthwhile startups in Africa and the Center East.

L-R: Hisham Halbouny and Mikael Hajjar.

Though most of P1 Ventures’ investments from its preliminary fund had been made within the seed stage, the agency characterizes itself as multistage and infrequently engages in Collection A and B investments opportunistically. It’s evident that P1 Ventures doubtless supplied small checks throughout subsequent phases of enlargement for firms reminiscent of Yassir and Egyptian fintech MoneyFellows, owing to the restricted dimension of its first capital. Nonetheless, it’s intriguing that the agency was in a position to take part in these rounds. Hajjar defined that the companions’ institutional observe document performs a big issue. He additionally famous particular cases when stage and geographical arbitrage had been essential and emphasised their energetic involvement in aiding firms with traders for follow-on rounds, expertise, and enlargement technique.

“Only a few African GPs handle funds with that institutional observe document and that enables us to have higher visibility on what it takes to construct category-defining companies, particularly as we have a look at inflection factors and arbitrage throughout phases and geographies,” the final accomplice stated, referencing how P1 Ventures picked Chari on the pre-seed stage slightly than extra standard B2B e-commerce offers in Egypt and Nigeria and MoneyFellows at Collection A as an alternative of different pre-seed/seed stage fintechs at comparable value factors in Egypt.

On high of that, P1 Ventures was additionally instrumental in connecting MoneyFellows with CommerzVentures for its Collection B spherical and Chari in a number of acquisitions it has made within the final two years, Hajjar remarked.

Common Atlantic-backed Reliance Well being and Gameball, an Egyptian software program firm gamifying loyalty and buyer retention with a consumer base throughout 70 nations, are amongst P1 Ventures’ 29 early-stage investments in 10 nations since its launch.

P1 Ventures has noticed that, on common, its portfolio companies have secured 35 occasions extra follow-on cash for each greenback it has invested, even within the face of a decline in international enterprise capital funding. The agency, which didn’t disclose its IRR, asserts that the metric stems from the numerous worth it contributes to its portfolio companies past capital. This worth is primarily attributed to the companions’ multistage, multisector experience and in depth networks throughout the U.S., Europe, and Asia.

Earlier than participating in angel investing in 2014 and establishing P1 Ventures in 2021, Halbouny beforehand had a place as a accomplice at Man Capital, a subsidiary of Mansour Group. Man Capital had invested early in outstanding firms reminiscent of Uber, Airbnb, and Bolt. He was additionally managing director at EFG Hermes, one in every of MENA’s largest funding banks. Alternatively, Hajjar, a Stanford MBA graduate and engineer, held roles in Google, Zum, and Areva, all of that are Fortune 500 firms.

“I’m the primary Mauritanian to launch a fund; as you may admire, this comes with a deep sense of that means. I do know African expertise is extra dispersed than present VC is. I intend to be this alteration agent and empower the subsequent era of African entrepreneurs. Similar to folks took an opportunity on me as an rising fund supervisor, it’s my responsibility now to again underdog founders and switch them into regional, if not international, winners,” Hajjar acknowledged.

“Additionally, what Africa goes by means of proper now, we consider, is similar to what Europe went by means of 25 years in the past or what Latin America went by means of eight years in the past. We consider P1 is greatest positioned to emerge because the premier VC identical to Index Ventures did in Europe or Kaszek in Latin America.”

Together with the companions, P1’s advisory group additionally consists of traders and operators, together with Emil Michael, the previous chief enterprise officer of Uber, and Bernard Dalle, a former accomplice of London-based Index Ventures.