Atlantica Ventures, an Africa-focused impact VC fund co-founded by Aniko Szigetvari and Ik Kanu in 2019, has made eight investments so far, and still has plenty of its US$50 million fund left to disperse as it seeks to power African tech startups from seed through to Series B.
Born in Hungary, Szigetvari has over 20 years of experience investing in emerging markets, mainly focused on technology, media and telecom, and a stellar résumé that includes roles at the IFC, McKinsey & Company, Kraft Foods International, and DHL Worldwide Express.
She told episode nine of Disrupt Africa’s “The month in VC” podcast series, released in partnership with Katapult Africa, Hlayisani Capital, ARM Labs Lagos Techstars Accelerator, and Atlantica Ventures, that having made investments in Africa on behalf of IFC since 2004, she started making angel investments of her own in 2015.
“This was when the ecosystem was very new. I made some investments in startups, and that investment experience, and being close to the development of the ecosystem, validated in my and my co-founder’s mind the interest in institutionalising that effort and creating a venture capital fund. So we eventually got going on Atlantica Ventures in 2019, and have been investing as an institutional investor ever since,” she said.
This is its first fund, worth US$50 million, and it has a focused investment strategy.
“We will invest in only a limited number of startups, but with the idea that we would support those startups across multiple funding grounds. So far we have made investments in eight startups, and we’re likely to double that – maybe a bit more – over the next few years,” said Szigetvari.
Atlantica, then, invests new cheques from pre-seed to Series A, and can follow-on at Series B, the final stage at which it invests.
“The idea is to support our startups until exit, not to to exit through secondaries. My co-founder and I come from more of a growth equity background, we have scaled a lot of businesses and exited a lot of businesses over our prior careers,” said Szigetvari. “We would like to, or hope to, bring those experiences to our startups and help them on their journey and help them anticipate growth pain points and opportunities.”
What does that support look like on the ground?
“It really is across the board, and really depends on the development stage of the startup. We help with bringing in new customers, opening up market channels, figuring out product market fit… Sometimes it can be as simple as helping with legal documentation. It’s really a wide range of interventions. We have a wide network of contacts across the globe, and we try to also utilise that to bring expertise into our startups as needed,” said Szigetvari.
Atlantica’s eight investments include Paystack and Sendy – two companies with two very different outcomes – and though Aniko says she loves all her portfolio companies, some are scaling faster than others.
“We have one startup called Sabi where we have funded all their funding rounds to this point. It’s a merchant marketplace that started in Nigeria and is now scaling to various markets in Africa. We’re very excited about that company, but there are many others. We have a cybersecurity out of South Africa that we think has fantastic potential. We invested in an AI lab out of South Africa as well. We have a nice IoT business that is helping to fix the cold chain industry and cold chain insurance issues,” she said.
“We spend a lot of time with our startups, and not just in growing them but also in due diligence, to make sure that we hopefully bet on winners and strong entrepreneurs. And so far I think that’s reflected in our portfolio.”
Atlantica, primarily funded by development finance institutions, is a pan-African fund, that so far has made investments in Nigeria, Kenya and South Africa. Aniko said she is keen to do more with startups in countries like Ghana, Ivory Coast, and Tanzania.
“The idea is really to scale these businesses that we invest in across Africa, and hopefully to other regions as well, by tapping into our networks across emerging markets as well as some developed ones,” said Szigetvari.
It is primarily focused on B2B and B2B2C businesses.
“Our experience and conviction is that B2B businesses are more resilient in emerging markets. So that’s our focus, and in terms of sectors it is tech and tech-enabled businesses. We’re looking to invest in fintech, marketplaces, digital security, logistics, Internet of things, enterprise applications of AI, and agri-tech, so quite a broad brush,” Szigetvari said.
Active on the continent for so long, is Aniko still bullish about the African tech startup space?
“Yes, and I would say even more because although the ecosystem is still relatively early-stage, it has matured quite a bit compared to 2015 or 2016. There’s a lot more startups, a lot more entrepreneurs with unique ideas. We’re starting to see here and there second-time founders, and there’s more and more funding available for startups,” she said.
African entrepreneurs, she said, are just as good as those anywhere else in the world.
“Our experience is that talent is distributed globally, and African tech entrepreneurs are just as good as any entrepreneur anywhere else in the world when we due diligence companies. We actually look globally and find other startups in other markets to see how they’re doing what they have done. Usually they’re further down the road in their development, but the African entrepreneurs are just as good,” said Szigetvari.
The global current venture capital landscape has not provoked too much of a rethink at Atlantica or among its portfolio companies, as they were not pursuing a growth at all costs strategy, unlike some businesses in the tech space.
“Growth at all costs, that’s revenue growth without cash generation, I don’t think quite works in emerging markets. I think that might be an easier proposition in the United States or other developed markets. So in general we have always been conscious of supporting startups where the focus wasn’t growing at all cost. I think the beauty of African entrepreneurs is that because the environment is tougher they have learned to create value and grow startups with very little funding,” Szigetvari said.
“I think that kind of experience and discipline was a little bit challenged with the availability of funding. But I think now we’re back into a funding winter, a tougher fundraising environment, I think that plays to the strength of the African continent and the experience of entrepreneurs. We are definitely focusing on helping our startups stretch the dollar and try to scale in a more profit-focused manner. I think things will eventually pick up in terms of funding but it will probably take longer than we expect, so it is good to build back that muscle.”
What does the immediate future look like for Atlantica? Szigetvari says it wants to deploy more capital.
“We have a lot of firepower,” she said. “So we’re looking for opportunities across the board., looking across the continent to find interesting startups and entrepreneurs. We have lots of money to invest, and we’re excited to support the right entrepreneurs.”
