SBI Holdings, a Japanese financial services conglomerate and one of the largest venture capital firms in the East Asian country, has made a $40 million multifund commitment to anchor Pan-African VC firm Novastar Ventures’ future funds.
The commitment is the first direct investment by the Tokyo Stock Exchange–listed company into a VC in Africa. Its subsidiary SBI Investment has already made in-roads into the African startup ecosystem by investing in Apollo Agriculture, Mono, the now-defunct WhereIsMyTransport, Hakki Africa, and Kepple Africa, a VC fund.
Following the deal, SBI Holdings will take a minority stake in Novastar and get a non-executive seat in its board as SBI’s adviser in Africa. Riki Yamauchi joins Novastar’s investment team to ensure that the set partnership objectives are met.
SBI Holdings has pledged to rally other Japanese institutional investors to match its investment in Novastar, as interest in Africa from the East Asian country grows.
Commenting on the partnership, Yoshitaka Kitao of SBI Holdings Inc. said: “With its rapid growth, young and tech-savvy population, abundant natural assets and increasing urbanization, Africa is poised for global leadership on sustainable development.”
“We recognize Novastar as the leader in African VC and look forward to building a new, trusted bridge between Japan and Africa for financial and strategic investment, knowledge transfer and innovation learnings. This partnership will leverage Africa’s megatrends for the mutual benefit of Japanese investors and African businesses,” said Kitao, who serves as SBI Holdings’ representative director, chairman, president and CEO.
The new commitment comes at a time when Novastar is raising its third pool, The Africa People + Planet Fund, which aims to close at over $200 million to invest in the agriculture and climate solutions sector. Novastar will back startups offering services that enable access-to-market and resilience in the face of climate change for the many clean techs that help decarbonize the growth envisioned for the continent, and climate techs that “protect biodiversity, improve soil health and capture carbon.”
Novastar sees value in a partnership with SBI Holdings as it raises its latest fund to back agriculture and climate startups, and plans to co-invest in future deals.
“Together with SBI, we see an opportunity to harness Africa’s development path to planet-positive, inclusive business models that leapfrog the polluting practices of the past and set us on track towards a sustainable and just future. Realizing this opportunity requires the capital, technology and long-term mindset of corporate Japan,” said Steve Beck, Novastar’s co-founder and managing partner.
Novastar’s previous funds include the $108 million Africa Fund II, which saw Novastar widen its geographical reach to include West Africa and its maiden kitty, the East Africa Fund — an $80 million fund with a $12.5 million co-investment facility — that invested in 15 startups within the region. Its investees include TradeDepot, an e-commerce scale-up; Turaco, an insurtech; Moniepoint (formerly TeamApt), a fintech; mPharma, a health tech; MoKo, a furniture startup; and iProcure, an agtech.
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