Afvest, a private investment firm, has set up Sh250 million fund for long-term investment in early-stage businesses with the potential to generate at least 25 per cent annual return.
The firm, backed by young professionals, says it is scouting for technology-driven start-ups and early-stage enterprises with “significant scope to scale to new markets”.
“Technology and technology-enabled businesses are certainly a key driving theme for Afvest,” said Sarah Ngamau, firm’s founding director and managing director for Creadev Kenya, part of French Investors-backed global investment company.
“These sort of businesses generally tend to be early stage, driven by young, ambitious founders and offer attractive scope to scale fast.”
Founded in 2012, Afvest’s major investments have been in solar firm Plexus Energy, mobile lender Micro Mobile and San Francisco-based 500 Startups, a venture capital fund.
David Ngaine, a director, said the firm has not set a ceiling on investment size neither does it invest to exit.
“At any point in time, the company will have Sh50 million to Sh60 million to be deployed. If the cash is deployed, the shareholders simply put in more (cash),” he said.
“We are long-term investors and we are not going to rely on selling off businesses and assets for capital to invest further. There’s capital from shareholders and we shall just keep on deploying that capital in start-up businesses we think have good long-term prospects.”
Start-ups and early-stage ventures usually rely on alternative funding for growth and development because commercial banks largely see them as highly risky for loans.
Nairobi is a major destination for private equity and venture capital firms with deals estimated at $430 million (Sh43.43 billion) in 2017 compared with $340 million (Sh34.34 billion) a year earlier, according to East African Private Equity and Venture Capital Association.