Africa-focused venture company P1 Ventures closes $25m fund to invest in AI products

P1 Ventures, an African-focused venture firm, has achieved the initial closing of its second fund, securing $25 million in investments. This capital comes from major African industrial conglomerates, private companies, funds, and general partners of global funds based in the U.S. and Europe. P1 Ventures anticipates completing its fundraising by early next year, according to Founder and General Partner, Mikael Hajjar.

Founded in 2020 by Mikael Hajjar and Hisham Halbouny, P1 Ventures initially focused on sectors such as e-commerce, fintech, health tech, and SaaS with its first fund of $11 million. With this second investment, the institutional venture fund intends to maintain its focus on these industries while incorporating Artificial Intelligence.

P1 Ventures’ first AI investment is in the Zambian startup Nkoloso.ai, which employs satellite imagery and AI to gather data and monitor agricultural land. This investment is one of two AI startups and five portfolio companies backed by the Dubai-based venture capital firm from its second fund.

Hajjar believes that the integration of AI in agriculture and fast-moving consumer goods (FMCG) illustrates Africa’s potential to utilize this emerging technology to circumvent traditional infrastructure – much like how mobile money surpassed the need for debit and credit card infrastructure in Africa. Moreover, AI showcases how African companies can develop globally impactful products.

According to Hajjar, “We believe that AI will be Africa’s next big leapfrog opportunity, just as fintech transformed the continent and disrupted the banking sector. We believe AI will have a similar impact on sectors like retail, healthcare, and the creative economy.”

He explained that the most promising thing about AI is its potential for global expansion. Also, investing in Africa often involves risks associated with operating within a single market and dealing with currency fluctuations as the attractiveness of AI lies in its capacity to establish businesses with an export-oriented focus.

Furthermore, Hajjar pointed to instances like Instabug, originating from Egypt, and InstaDeep, a subsidiary of BioNTech, both of which are African-founded software and AI companies serving customers not only in the U.S. and Europe but worldwide.

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P1 Ventures’ entrepreneur-in-residence program and startup incubation

P1 Ventures, with offices located in both Lagos and Cairo, has recently introduced an Entrepreneur-In-Residence program. The program has helped Nkoloso.ai secure financial support.

The two partners draw upon their extensive skills and experience as previous industry operators to oversee this venture studio. The studio’s strategic goal is to nurture an additional four startups over the next four years, led by founders who possess the capacity to attain product-market fit and successfully scale their products.

Speaking with TechCrunch, Hajjar says, “We go off the beaten path and back the underdogs; we invest where no one else does.”

This emphasises the early investments made by P1 Ventures’ first fund in startups operating within French-speaking African markets, such as Yassir, a mobility startup that transformed into a super app in Algeria; Chari, a B2B e-commerce platform in Morocco; and Djamo, a payment startup in the Ivory Coast.

These emerging enterprises have achieved the status of being the best-funded startups in their respective nations. Notably, Yassir, the company’s initial investment, distinguishes itself as one of the most valuable startups in both Africa and the Middle East.

P1 Ventures primarily focuses on seed-stage investments but considers itself a multistage investor and occasionally participates in Series A and B rounds when opportunities arise. Despite the initial fund’s limited size, P1 Ventures likely provided smaller investments in later expansion stages for companies like Yassir and Egyptian fintech MoneyFellows.

This participation is notable, and Hajjar attributes it to the company’s institutional track record. He also highlighted instances where stage and geographical differences played a vital role and emphasized their active support in helping companies secure follow-on investments, talent, and expansion strategies.

The General Partner at P1 Ventures highlighted the rarity of African GPs (General Partners) with an institutional track record, which provides the firm with valuable insights into building category-defining businesses. This expertise allows P1 Ventures to make strategic investment decisions such as choosing Chari at the pre-seed stage over more popular B2B e-commerce opportunities in Egypt and Nigeria, and opting for MoneyFellows at Series A instead of other early-stage fintechs at similar price points in Egypt.

Additionally, P1 Ventures played a crucial role in connecting MoneyFellows with CommerzVentures for its Series B funding round and assisted Chari in various acquisitions it made over the past two years.

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