Norrsken 22, a tech growth equity fund formed by the co-founder of payments unicorn Klarna, closed its first African fund above target amid strong investor demand.
Norrsken22, which was co-founded last year by former Klarna executive Niklas Adalberth and others, raised $205m (€190.8m) for its first African tech growth fund. That’s $5m above target.
Investor appetite for African tech markets is “growing and improving every year,” Natalie Kolbe, managing partner of Norrsken22, told Impact Investor.
“Capital in Africa has grown tenfold in five years but we still only represent less than 1% of all global funding into tech,” Kolbe said. “Naturally Africa was not immune to the pull-back in venture capital funding in 2022/23 but was certainly the least impacted region in the world.”
‘Growing tech tailwind’
Not only does Africa have the youngest population in the world – according to the United Nations, 70% of people living in sub-Saharan Africa are under the age of 30 – that demographic is also digitally savvy and increasingly living in urban areas. And it is these trends that Norrsken 22 hopes to take advantage of.
“The timing of the fund ideally positions Norrsken22 to support a growing African tech tailwind,” said Kolbe in a press release. “The transformative power of technology can leapfrog traditional ways of doing business and Africa has the opportunity to lead the world with its solutions.”
New institutional investors
Norrsken22, which targets investments in fintech, edtech, medtech and market-enabling solutions in Africa, counts more than 30 unicorn founders among its backers, including the founders of Flutterwave, Skypen and Mojang. The fund is also supported by SEB Pension Foundation and family offices.
Since the fund’s first close, Norrsken 22 said a number of high-profile institutional investors have come on board. These include British International Investment (BII), International Finance Corporation (IFC), US International Development Finance Corporation (DFC), Standard Bank and Norfund.
“We are delighted to see an active and growing early-stage investor community growing across the continent, however we still see a gap at growth stage tech funding in the continent,” Kolbe said. “We see a huge opportunity here, and are excited to continue investing at this stage.”
Since its inception, Norrsken 22 has made five investments, including in South African challenger bank Tyme Bank, African business-to-business digital commerce platform Sabi, Africa’s leading identity verification solution, Smile ID and auto financing platform Autochek.
When asked by Impact Investor what the main criteria are for investing, Kolbe said the fund prefers companies whose founders “are going after big problems and solving them with a tech-enabled approach”.
A potential portfolio company also needs to have a proven business model “with highly engaged and returning customers”. And finally, its technology models need to be “lean and capital-light, with compelling unit economics,” Kolbe said.