Pan-African venture capital firm Launch Africa Ventures says it has returned cash to investors for the first time, demonstrating that African technology start-ups can generate real financial returns despite a challenging global funding environment.
According to a statement, the VC firm has distributed about $2.5 million (about R45 million) to investors in its Launch Africa Seed Fund I, which was launched in 2020.
The payment represents about 7% of the capital committed to the fund and follows 11 successful exits from companies in its investment portfolio.
Returning cash to investors is seen as one of the strongest measures of success for a venture capital fund because it shows investments have generated real financial returns rather than only increasing in value on paper.
"This distribution is an important milestone – for our investors and for the African venture ecosystem more broadly," says Zachariah George, co-founder and managing partner at Launch Africa Ventures.
“Venture capital is ultimately judged on realised returns, not paper gains. We are proud to show that African technology companies can generate liquidity, and that our investors can receive cash while significant upside still remains in the portfolio.”
According to George, the milestone means the fund has become "DPI-positive", an investment industry term that indicates a fund has started returning money to investors. According to the company, many VC funds launched globally in 2020 have not yet reached this stage.
Launch Africa Ventures was founded in 2020 by entrepreneurs George and Janade du Plessis, and has invested in more than 180 early-stage technology start-ups across 25 African countries, since inception.
The VC firm is headquartered in Ebene, Mauritius, and also has core operations in Cape Town.
Its portfolio includes companies operating in sectors such as fintech, health technology, agriculture, logistics, education technology and enterprise software.
Some of Launch Africa's South African investments include: Peach Payments (fintech), DigsConnect (student accommodation), Shopstar (e-commerce), MoyaApp (communications), SwiftVEE (agritech) andCtrl (insurtech).
According to the VC firm, the 11 exits that enabled the latest payout came from businesses operating in financial technology, payments, agriculture, logistics, business software and employee wellness across several African markets. Three of the 11 are South African firms, it notes.
Confidence in African start-ups
The announcement comes as global VC funding continues to recover after slowing sharply in 2022, when rising interest rates and economic uncertainty made investors more cautious.
Launch Africa says the latest payout demonstrates that African technology start-ups can deliver returns, even in a challenging investment climate. Launch Africa believes its latest distribution reinforces confidence that African technology start-ups can deliver long-term value, while supporting innovation and entrepreneurship across the continent.
"From day one, we set out to build a venture platform that pairs broad market access with disciplined portfolio management. This distribution is the product of years of work – backing founders, building strategic relationships and actively engineering liquidity for our investors," adds Du Plessis, co-founder and managing partner at Launch Africa Ventures.
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