Founders Factory Africa closes $114 million round to better serve founders in Africa

Founders Factory Africa, the South Africa-based venture capital firm that invests in early-stage startups, has closed a $114 million round, the firm said in a statement on Monday. Founders Factory said it will use the new funding to “scale its model to better serve founders across the African tech ecosystem.”

A huge chunk of the funding came from the Mastercard Foundation and the Johnson & Johnson Impact Ventures, an impact fund within the Johnson & Johnson Foundation, the Scottish foundation that focuses on improving healthcare solutions in developing countries.

Co-founder at Founders Factory Africa, Alina Truhina, said that this move is exciting for the venture firm because it is leveraging its relationship with previous investors for the new round.

“We are excited to have new and dynamic funding, which follows on from previous investments into Founders Factory Africa by Standard Bank Group, Small Foundation and Netcare Group,” she said.

Founders Factory’s history of startup investment

Founders Factory Africa has a long history of being an active startup investor on the continent, including providing both operational and capital support for companies in its portfolio.

With this funding, it said it will double down on that hybrid investment model and combine the provision of capital and operational support for the early-stage startups it hopes to invest in.

Since its inception in 2018, Founders Factory Africa has invested in over 55 tech start-ups across 11 countries in East, West, North and Southern Africa.

It has already received prior investments from heavy-weight investors like the Standard Bank, Small Foundation and Netcare.

In 2019 in a partnership with the South African healthcare company Netcare, Founders Factory Africa selected 35 African health-tech startups for an acceleration and incubation program in which it invested $38,000 in the selected startups and offered them over £220,000 worth of support services.

Accelerators are the lifeblood of the African ecosystem where funding for startups is hard to come by. Traditional financial institutions are less inclined to fund companies that don’t have physical assets like warehouses, stores etc. During demo days, investors looking for tech startups that would otherwise not have met these assets see them present their products. It’s why accelerators have become very important to the sustenance of the ecosystem.

Read also: Nigerian Healthtech Startup, RxAll Secures N135m Investment from Founders Factory Africa

Founders Factory Africa knows this and has been launching a series of them following its accelerator programs since its earlier partnership with Netcare in 2019.

In 2021, it partnered with Small Foundation, another of its investor, to select 18 agritech startups for an acceleration and incubation program. The selected startups had access to funding between $100,000 to $250,000 and hands-on technical support.

With this current fund, Founders Factory Africa said that it will be casting its net wider to accommodate more startups, but also zeroing in on only the startups that meet its terms. It said in the statement that gender balance and a focus on business fundamentals will be key to receiving its funds.

“The additional funding affirms Founders Factory Africa’s hybrid investment model of combining capital and operational support and will help the early-stage investor further iterate this model by becoming sector-agnostic in its investment with founders who prioritise business fundamentals, and will also double down on addressing the gender imbalance in the ecosystem,” the statement said.

Founders Factory Africa said it will be “broadening its capital investment offering to include non-dilutive capital, supporting the continent’s need for different capital deployment types across the venture maturity curve,” and “strengthening Founders Factory Africa’s internal capacity to continue to provide its portfolio of start-ups with the best venture-building support on the continent.”

CEO, Bongani Sithole said that the firm is determined to achieve its goals of developing the tech ecosystem by supporting tech-driven solutions. He added that the company will continue to provide the founders it invests in with the necessary tools for success.

“Moving Africa forward requires more of us to support tech-driven, solution-oriented ventures that have the potential to scale and make an impact at speed. Our role as Founders Factory Africa is to provide founders with the funding, knowledge and hands-on venture-building support they need to achieve commercial success and create outsized, systemic impact,” he said.