Managed by Next Billion Capital Partners, the fund plans to invest in local companies driving financial and digital inclusion across emerging markets. Investors at first close include Impact Engine and responsAbility.
Next Billion Capital Partners has announced the first close of its Digital Growth Fund I. The $250m (€234m) fund plans to invest in growth-stage companies enabling financial and digital inclusion in Southeast Asia, the Middle East and Africa, and Latin America.
Investment managers Impact Engine, Capricorn Investment Group, and responsAbility Investments have all invested in the new fund. Next Billion Capital expects the fund to have subsequent closings this year from additional investors including fund-of-funds, corporates, family offices, and development finance institutions.
“We are honored to receive the backing of an incredible group of limited partners in the first closing of Digital Growth I,” said Ruzgar Barisik, one of the fund’s managing partners.
“The support of top-tier impact-focused investors validates our belief that technology can uniquely drive impact at scale and allows us to focus on our mission of scaling this next generation of digital leaders that will drive transformative growth in emerging markets.”
Focus on the ‘Next Billion’
Next Billion Capital Partners is the brainchild of Falgu Shah, Ken Toyoda, and Barisik, who met while they were all working at the World Bank/International Finance Corporation in 2014. The three started the firm with Christopher Schroeder in 2019 to catalyse the next generation of transformative companies in emerging markets.
The new fund plans to invest between $10m and $15m in 15 to 20 local digital market leaders who need money to grow further, with the aim to positively impact the lives of women, low-and-middle income households and underserved micro, small, and medium enterprises. Together, this group makes up the so-called “Next Billion” users of tech products who will shape the global digital economy.
The new fund has already made its first investment in Qoala, an insurtech business in Southeast Asia. The region is one of the most underinsured areas in the world.
“We are deeply rooted in the markets where we invest and are here to stay across cycles,” said managing partner Ken Toyoda. “The current environment – reduced levels of capital deployment and 10-year low valuations, against a backdrop of rapid digitalisation in emerging markets – represents a generational opportunity to deliver outsize financial returns and impact.”
Opportunities
There continue to be “strong growth opportunities in emerging economies even if markets are currently muted”, said Priya Parrish, partner and chief investment officer at Impact Engine.
She added her firm had invested in Next Billion’s flagship fund “because of their extensive experience investing in these economies with boots on the ground. Growth equity is an attractive strategy in this environment and the fund’s diversification across several countries gives us the ability to manage risks and capture upside.”
