The Capital Quest | Japanese VC Kepple gets key LP for Africa fund after tying up with PE firm

Kepple Africa Ventures, one of a handful of Japanese-origin venture capital firms betting on African startups, has looped in a key Limited Partner (LP) for a large VC fund.

The VC firm had backed as many as 103 startups at a break-neck speed from its first early-stage fund, which had a corpus of around $18 million. For its new investment vehicle, Kepple joined hands with Verod Capital, a West African private equity fund manager to invest in startups, as first reported by The Capital Quest.

The new firm, christened Verod-Kepple Africa Ventures (VKAV), is already actively investing and is targeting a corpus of $100 million. This would make it one of the largest VC funds focused on African ventures. Most VC funds in the continent are in the $20-75 million range, although a few firms are raising larger vehicles.

TLcom is raising a bigger corpus and Norrsken22 is eyeing around $200 million in its debut investment vehicle. Partech, which had raised a record corpus for its last fund, has tapped an anchor LP for one of Africa’s largest VC funds.

Meanwhile, Toyota Tsusho Corporation has committed money to VKAV. This adds to its Africa exposure. It had also backed Samurai Africa Fund 2, another Japanese VC fund active in Africa, last year.

Previously, Toyota Tsusho, together with its subsidiary CFAO SAS, established Mobility 54 Investment SAS, a corporate VC firm dedicated to investing in and financing mobility-related startups in Africa, in October 2019.

Since its establishment, Mobility 54 has invested approximately $28 million in 14 startups.

The latest investment in VKAV is aimed at sourcing for startups in the healthcare, consumer goods, carbon neutral and other fields and pursuing business synergies with Toyota Tsusho Group and Mobility 54.

The new VC fund has already backed four companies: Moove, Koko, Nowpay and Ceviant. All except Ceviant are existing portfolio companies of Kepple. This means follow-up investments in the three companies were routed through the new fund, even though the new firm is yet to announce a fundraising milestone.

Ceviant is a fintech startup with operations across the UK, Romania and Nigeria.

VKAV’s investment team is led by two partners from Kepple, one from Verod and one new member.

Satoshi Shinada, a former Sojitz executive who is based in Nigeria, and Ryosuke Yamawaki, a former Mitsui executive who is based in Kenya, are part of the four-member investment committee at VKAV.

It is not clear if Takahiro Kanzaki, one of the team lead and general partner at Kepple is part of the new JV. Kanzaki, a former KPMG executive who had launched a SaaS tool named Fundboard with investment from Nikkei and was responsible for fundraising, is not named as part of the VKAV team.

Verod’s representative at the committee is co-founder and partner Eric Idiahi. The fourth member of the committee is former managing director at Omidyar in Africa, Ory Okollah. Omidyar was one of the early backers of Africa’s most valued startup Flutterwave.

VKAV seeks to leverage the Asian limited partner base and networks with local PE presence and investment experience to create a tight combination.

For Verod, this adds another asset class to its business, similar to how Tunisia-based AfricInvest operates. Pan-Africa and multi-asset manager AfricInvest had tied with Cathay Capital’s venture arm to float a VC venture in 2019.

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