Growing up in a business family in Kenya, Sapna Shah understood the power and potential of enterprise and markets to enable development, create jobs and empower consumers to choose the right products and services that work for them.
After leaving her home country aged 18 to study Economics and Politics at the London School of Economics, upon graduation Shah began a career in commercial banking, specifically working with small to medium-sized companies at various stages of their life cycle.
“Doing this in the UK, US, Europe and Middle East taught me the importance of understanding different cultures and norms, but underlined my passion for working with entrepreneurs and enterprise – if done right, a universal force for positive change,” she said.
Shah moved back to Kenya in 2012 as the co-founder of a bricks and mortar food business, and also started making angel investments in emerging African tech startups. She was introduced to impact investing in her role as a portfolio manager at Acumen, and joined Novastar in 2015.
The firm was founded in 2014 to fuel the entrepreneurial revolution that is transforming markets and sectors in Africa. It was one of the first – and is now one of the largest – institutional VCs in Africa, having raised US$80 million for its first fund in 2014. That was focused on East Africa, and its second, US$108 million fund, closed in 2020, saw it expand into West Africa.
“Like us, the bold entrepreneurs we back are obsessed with serving the basic needs of everyday consumers and producers; understanding their lifestyles, the friction that slows them down, the tools that lift them up, and the informal markets where they live, work and shop,” said Shah.
Novastar’s investors are a mix of private and public capital, ranging from development finance institutions (DFIs) such as British International Investment, FMO, Norfund, Dutch Good Growth Fund, European Investment Bank and Swiss Investment Fund for Emerging Markets, to private institutions like AXA Investment Managers and Blink.
It now has over US$200 million of assets under management and 24 portfolio companies, with some of the standouts being Moniepoint (formerly TeamApt), TradeDepot, mPharma, and BasiGo.
“Alongside the financial value, our portfolio companies are also creating significant social and environmental benefits. At the end of 2022 , they had created measurable and lasting social value for over 30 million everyday consumers, producers and employees,” said Shah.
“We expect to see the social and environmental value created increase in-line with the commercial growth of our portfolio companies.”
Novastar is sector-agnostic, but screens for businesses that are revolutionising entire sectors, addressing a large market and serving the everyday consumer or producer in Africa.
“We have thus invested in companies solving problems in health, agriculture, education, energy, insurance and finance. We are multi-stage investors and can invest from seed to Series D, and anything in between,” Shah said.
“A team of entrepreneurs ourselves, we partner and build relationships with founders to support them through their journey from seed to scale. If the companies we invest in are successful, they will grow quickly and need to raise multiple rounds of capital to do so – we support our companies through that process and use our global networks to connect them to capital providers.”
Novastar’s first two funds focused on backing businesses that provide essential goods and services in new and innovative ways.
“Going forward we are looking at using the same tools and strategies to support planet-positive innovations and technology. We see a massive opportunity to create sustainable, planet-positive mass-market business models that can work, not just across Africa but globally,” she said.
