Kenyan venture capital firm FrontEnd Ventures unveils fund to support local founders – TechCrunch
After spending years in London connecting diaspora Kenyans with investment opportunities in their home country and then as a credit portfolio manager at Barclays bank, Njeri Muhia sought a greater challenge in Africa.
Already aware of the growing startup ecosystem on the continent and the funding gaps local founders face, she teamed up with Steven Wamathai, who has extensive experience in the investment management industry in the mid-least. year, to start an early-stage venture capital company. , FrontEnd Ventures, which focuses on Kenyan startups and is backed by a $5 million fund, with the potential to grow to $10 million.
The fund’s take-off was quick and it just closed its first $1 million to help Kenyan founders secure the seed funding that often eludes most, despite the country being among the top four investment destinations. investment in Africa.
“We invest in Kenyan founders because we believe in our thesis that people who have lived experiences have a much better chance of creating products that address related nuances,” said Muhia, partner and co-founder of FrontEnd. , at TechCrunch.
“It also means investing in local female founders, because they bring with them a different profile of experiences, solutions and unparalleled ingenuity.”
FrontEnd targets impact-driven tech startups in a variety of industries, including agriculture, e-commerce, healthcare, and transportation.
The VC has already started issuing its first notes up to $100,000, but wants to make follow-on investments in startups in its portfolio.
“We’re reducing them at risk by depositing small checks at first, but our intention is to have follow-on investments — where we can invest up to $500,000 in Series A,” she said, noting that they had just made their first investment and are evaluating a few other startups with the intention of funding at least five more before the end of the year.
In an industry where relationships between VCs and startups are formal, Muhia said they hope to have relaxed relationships with founders.
“We want to develop a very strong relationship with the founders. And that means being open to their calls…and not just when they want to talk about their business, but also about themselves. We understand that they also need support as individuals because they are the ones who are going to keep this business alive for the foreseeable future,” she said.
The VC is also considering a tech-as-a-service arm that can extend services to startups, helping them build faster.
“We envision this technology as a service feature that can help startups solve their problems just as quickly and affordably. We are also developing our rolodex of service providers who can work with them because obviously the founders are not experts in all areas,” she said.
Muhia said FrontEnd is in talks with a number of institutions and high net worth individuals (HNWIs) in Kenya to join its current roster of investors which currently includes executives from the banking, real estate and manufacturing sectors.
“Our fund is backed by Kenyan LPs, and what I like about those who have signed up is that they understand the need to support new local businesses.”
She goes on to note the need to educate more HNWIs on the potential of investing in startups. Demystifying the ecosystem, she says, is key to unlocking more local funding.
Currently, startups in Africa are mainly driven by foreign investment flows from venture capital funds in the United States, Europe and Asia, as the appetite for opportunities on the continent continues to grow.
The amount raised in the first half of the year also more than doubled to more than $3 billion from a similar period last year, according to Big Deal data. And Africa is likely to enjoy another banner year as admissions continue to rise.
Last year, startups in Africa raised nearly $5 billion, double the investment from the previous year and nine times what was raised five years ago. However, this amount continues to disproportionately favor – especially in Kenya – North American and European founders.
FrontEnd hopes to be part of a campaign to channel more funds to local founders.
“We must support the local founders because they are people who will completely change the face of our country and our continent. Our job is to make sure they are comfortable with math and economics. And I’m pretty sure that once we manage to make a few more investments and have something more tangible to offer them over the next few months, there will be a lot more people and startups joining us. .