Phineas Rueckert
1 min read
Novastar Ventures
Sector: Sector-agnostic
We manage more than $180 million across two venture funds. We deploy distinctive assets and capabilities to support exceptional entrepreneurs creating and growing breakthrough businesses in East and West Africa.
Novastar Ventures started as a simple idea: by applying a venture capital philosophy to emerging sectors and a mass market, you can achieve great returns. Cofounders Steve Beck and Andrew Carruthers launched the first fund in 2014. The firm started out as little more than an investors club, but with investments in some of the biggest startups in East Africa and West Africa, such as Bridge International Academies, Sanergy and mPharma, it has quickly become one of the best-known funds on the continent. “You can build a massively successful business by serving the low-income mass market as the engine of growth,” says Niraj Varia, a partner at Novastar Ventures. “Our mission is not to just make venture investments for ourselves; it’s to catalyze the entire venture ecosystem.”
Social impact is part of Novastar Ventures’ inherent model. The startups that it invests in address problems common to East and West Africans: agriculture, sanitation and healthcare to name a few. The fund also filled a gap in the investment sector in East Africa – while there are a number of investors putting money into early-stage startups, few are willing to invest in multiple rounds. Novastar Ventures invests in many companies preprofit and even some that are prerevenue. “We can demonstrate that if you invest in companies, deliver commercial returns and have impact, others will crowd in,” Niraj says.
The fund’s main office is in Nairobi, but Novastar Ventures has investments across
the East Africa region, Ghana and Nigeria. In these areas, Niraj says, there are numerous opportunities for private sector solutions to public challenges, and the entrepreneurship world is quickly growing and evolving. “A lot of the things that in other places would be considered as public utilities are not delivered here, so the private sector needs to step in,” he says. “They’re hard to deliver, but if you can deliver them, you can scale very quickly.”
Checklist
- Have a transformational project.
We are looking for great businesses that are an order of magnitude higher. The goal needs to be to change the way a sector works across the continent. - Bring together an absolutely great team.
We look for teams that have the right blend of experience and skills, that have demonstrated an ability to learn, that are good at listening to what the market is saying and that have the humility to accept when they are wrong but also the robustness to stand up again. - Demonstrate fundamental business economics.
How is the operation built, and are you thinking about building opportunities in a sustainable way? Can it grow exponentially at very small marginal cost? - Focus on impact, but across sectors.
The truth is, if you’re serving the low-income mass market you are having an impact. We have invested in many different sectors.
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