A sum of $25 million has been earmarked by Pan-African venture capital firm, P1 Ventures, at the first close of its second fund. The firm got funds from Africa’s biggest industrial conglomerates and private firms, and general collaborators of international funds based in Europe and America.
Mikael Hajjar, founder and general partner of the firm revealed that they are looking at making a final close by early 2024. His partner is Hisham Halbouny, who also serves as a general partner with whom he launched Pi Ventures in 2020. Hajjar says the first fund phrased “a proof-of-concept fund” has earmarked $11 million to fund 24 ventures, mainly focusing on e-commerce, fintech, insurtech, health tech, and SaaS industries. The second fund will still fund these major sectors but with the addition of Artificial Intelligence (AI).
Zambian startup Nkoloso.ai is the first investment in the group. The startup collates information and keeps track of large regions of farmland using satellite imagery and AI. It is one of the two AI startups and five investment firms P1 has supported from its second fund.
Mikael Hajjar believes the application of AI in the farming sector and fast-moving-consumer goods (FMCG) industry advertises the continent’s ability to utilize innovation to bypass the regular framework. This has been the same way mobile money in the continent exceeded the need for debit and credit card infra. In addition, AI shows how the African firms can establish goods with international reach.
He went on to say “We believe that AI will be Africa’s next big leapfrog opportunity. So, when you think how fintech transformed the continent and allowed it to disrupt the banking sector, we believe AI will do the same with sectors like retail, healthcare, and the creative economy. What we see beautiful in AI is the ability to export. As you know, single market and currency risk are the main risks in investing in Africa. The beauty of AI is that you have export-first businesses.”
The general partner Hajjar used Egypt-born Instabug and BioNTech-subsidiary InstaDeep as examples of such African-founded software and AI businesses with customers in the U.S., Europe, and globally.
With offices in Cairo and Lagos, the startup commenced with an Entrepreneur In Residence initiative where funding is received by Nkoloso.ai. The two firms synergize their potential and expertise as past operators to manage this venture studio. The venture will aid the incubation of more startups in the coming years. These startups will be headed by leaders with the ability to accomplish products of commercial fit and upgrade the product.
P1 Ventures sees itself as multistage and sometimes engages in Series A and B funding though most of its investments from its first fund were established in the seed stage. It is quite a feat for the startup to engage in these rounds because it provided only small checks during the expansion of subsequent platforms for firms such as Yassir and Egyptian fintech MoneyFellows due to the limited size of its first funds.
Hajjar noted that the track records of the partners are one of the major contributing attributes. He added some particular occasions when location and topographical arbitrage were important. He reiterated the part they played in helping firms with investors for follow-on rounds, skills, and expansion plans.
The general partner concluded saying “Very few African GPs manage funds with that institutional track record and that allows us to have better visibility on what it takes to build category-defining businesses, especially as we look at inflection points and arbitrage across stages and geographies.”