With technology poised to fuel Africa’s growth, V8 Capital Partners targets innovative ventures that cater to the needs of small caps, in a bid to deliver both sustainable and strong returns for its limited partners (LPs). Tobi Oke, managing partner, emphasizes the crucial role of technology in fostering growth across Africa.
In the dynamic landscape of African markets, limited partner investors (LPs) are recognising the potential for strong returns and a sizable impact through technology investments. Of the many gaps that need addressing, one gap often overlooked is the technological needs of Small-cap companies in Africa. This is the central pillar of our investment thesis at V8 Capital Partners
Small-cap companies form the backbone of the African economy, contributing over 55% to gross domestic product (GDP), and up to 70% of employment. These companies require automated workflows, reliable digital payments and fit for purpose technology solutions. Global tech giants like Microsoft and Oracle address these needs for larger corporations while regional tech players serve the smaller companies in most other regions, but not in Africa. This is the gap we focus on.
At V8 Capital Partners, we see our investments as catalysts for growth in. Since 2018, we have made investments that create impact at a platform level. For instance, our portfolio company Zone, a blockchain payments company, systematically removes delays and fraud while reducing transaction costs for banks.
Implementing this solution has created a sizable impact for Small-cap companies and banking customers, improving financial inclusion and trust. We have made similar investments in the education sector, empowering players with K12 school automation. Similarly, in agriculture, and exporters can now automate brokerage and credit, with our investments.
Navigating the intricacies of serving companies in diverse African markets has led us to develop a robust investment diligence process and a portfolio management playbook. Emphasising governance and promoting gender diversity in executive management has also been key to mitigating risks. Additionally, we have found that offering LPs co-investment opportunities and working with their other emerging markets GPs has been beneficial.
Many investments in private equity and venture capital in Africa have struggled with exits, creating zombie investments for LPs. To avoid this, we invest with a well-defined exit strategy, deliberately building relationships with potential acquirers before and during our investment period.
Recent transactions have confirmed this approach with global and regional technology enterprise players like Stripe and Visa acquiring Paystack and Interswitch.
We expect to see more of this going forward.
