Nairobi-based venture capital fund Antler East Africa is raising $15 million (Sh1.6 billion) from institutional investors, including the International Finance Corporation (IFC), to invest in local and regional start-ups.
The company says it invests $100,000 (Sh11.1 million) for a 20 percent stake in each company selected by its investment committee.
IFC is set to invest a total of $2 million (Sh222 million) in Antler which will raise the rest of the capital from other investors.
“The fund is seeking to raise $15 million (Sh1.6 billion) in capital commitments. IFC has proposed an equity investment of up to $1.5 million (Sh166 million) … through Catalyst and $0.5 million (Sh55 million) through We-Fi,” IFC said in its investment disclosures.
We-Fi refers to Women Entrepreneurs Finance Initiative which is designed to launch and grow female-owned companies.
“The blended finance co-investment will contribute to accelerate the fund manager’s support to early-stage women-owned/managed start-ups by setting up women entrepreneurship targets that ensure these start-ups are an ongoing and dedicated focus of the fund,” IFC said.
Antler will be managed by Marie Nielsen and Melalite Ayenew and will invest in young companies in East Africa.
“Antler East Africa is based in Nairobi and will be making investments across the Eastern Africa region and occasionally other countries when the ideas developed out of the programme in Nairobi are more fit for other markets,” IFC said.
Nairobi is among African cities with a vibrant start-ups ecosystem, bringing together entrepreneurs and investors in fields such as digital payments, entertainment and e-commerce.
A 2019 study by non-profit firm encap found that the capital city’s major area of strength is human capital. Nairobi has an estimated 100 start-ups.
“The momentum of Nairobi’s start-up ecosystem is growing, with an increasing number of hubs and talented entrepreneurs,” encap said in the report.
“Nairobi has a growing start-up ecosystem with a promising future. In the Start-up Friendliness Index of the Middle East and Africa, Nairobi is ranked seventh out of the 16 cities assessed in this region.”
The challenges facing Nairobi-based start-ups include relatively higher taxation and smaller size of the economy.
“Nairobi ranks approximately average in the region on all indicators, though the corporate tax rate (30pc) is notably high, and corruption is highlighted as a consistent challenge. Finally, market conditions are not favourable, given low GDP per capita in Kenya,” the report said.