The Norrsken22 invests in tech startups across the African continent, with fintech, healthcare and education as key target sectors. The fund, backed by leading tech founders, is about to make its second investment
A young and tech-savvy population coupled with a lack of physical infrastructure and ample opportunity for growth-stage investment, makes Africa the ideal place to launch a tech growth fund.
This is according to Natalie Kolbe, managing partner of newly-launched equity growth fund Norrsken22 African Tech Growth Fund.
The fund, a joint initiative by Northzone Ventures partner Hans Otterling and Klarna founder Niklas Adalberth’s Norrsken Foundation, reached its first close of $110m (€104m) in January, with a final fundraising target of $200m.
“Everything has moved online and we’re seeing huge business and investment opportunities in the digital space. In Africa, we have an advantage over more developed regions as it’s possible to leapfrog traditional industries. Without the impediment of existing physical infrastructure, adopting technology in Africa will be quick and fast,” Kolbe says.
She adds: “Also, Africa has the youngest population in the world with 60 percent being under the age of 25. Adopting new technologies comes naturally for the younger generation.”
An example is tertiary education where technology can improve access while lowering the cost. “Traditional tertiary education institutions are very expensive to build and don’t necessarily serve the mass market well, given high cost and the difficulty of physical access. With tech-enabled solutions you can access the same course or degree from you living room, without having to travel far distances and at a fraction of the cost,” Kolbe says.
Fintech and healthcare
About a third of the fund’s capital – $70m – comes from the so-called ‘unicorn board of founders’, or founders of companies which have achieved a pre-market valuation of at least $1bn. The founders of Flutterwave, DeliveryHero, Skype, Klarna, Mojang, Izettle and King are among the backers.
The fund aims to invest in scalable businesses across Africa with a focus on the main tech hubs in Nigeria, Kenya, South Africa and Ghana. Business models that offer tech-enabled solutions in financial services are a key focus, according to Kolbe.
“One of the biggest impact opportunities is in the fintech sector. Many Africans are un- or underbanked and have limited access to credit payment infrastructure. Healthcare is another sector where we think technology can lower the cost of quality healthcare and increase physical access. The Covid-19 pandemic has accelerated the adoption of technology such as remote diagnostics and online schooling,” she says.
While operating independently from the Norrsken Foundation, Kolbe stresses that the fund has a strong impact angle with increased access to education, healthcare, financial inclusion, employment and economic development as a driving force for investment.
So far, the fund has backed Nigerian investment supply chain marketplace Sabi, and is looking to close its second investment this month.
“We are looking at later-stage businesses that have real traction with customers and are on a trajectory to profitability. Our job is to connect these business opportunities with investor capital and fund entrepreneurship on the continent,” she says.