Kenyan VC firm FrontEnd Ventures unveils fund to support local founders – TechCrunch

After spending years in London, matching Kenyans in the diaspora with investment opportunities at home, and later as a loan portfolio manager at Barclays bank, Njeri Muhia sought a bigger challenge within Africa.

Already aware of the growing startup ecosystem on the continent and the funding gaps facing local founders, she went on to set up a venture capital startup in the middle of last year with Steven Wamathai, who has vast experience in the investment management industry, Front End Ventures. , which focuses on Kenyan startups and is backed by a $5 million fund – likely to expand to $10 million.

The fund has taken off quickly and it has just closed its first $1 million to help Kenyan founders secure early stage funding that often eludes most of them, despite the country being among the top four investment destinations in the world. Africa belongs.

“We invest in Kenyan founders because we believe in our belief that people who have experiences have a much better chance of creating products that address related nuances,” Muhia, FrontEnd partner and co-founder, told TechCrunch.

“This also means investing in local female founders, as they bring a different profile of experiences, solutions and ingenuity that is unmatched.”

FrontEnd targets impact-driven tech startups in various sectors, including agriculture, e-commerce, health and transportation.

The VC has already started issuing its first tickets up to $100,000, but is eager to make follow-up investments in startups under their portfolio.

“We mitigate risk by depositing small checks early on, but our intention is to make follow-up investments — where we can invest up to $500,000 in Series A,” she said, noting that they recently made their first investments. , and are evaluating a few other startups with plans to fund at least five more before the end of the year.

FrontEnd Ventures Unveils $10 Million Fund to Support Kenyan Founders

Steven Wamathai, co-founder and partner of FrontEnd Ventures. Image Courtesy of: FrontEnd Ventures

In an industry where VC and startup relationships are formal, Muhia said they hope for relaxed ties with founders.

“We want to develop a very strong relationship with the founders. And this means being open to their calls…and not just if they want to talk about their business, but themselves. We understand that they also need support as individuals as they are the ones who will keep this business going for the foreseeable future,” she said.

The VC is also considering a tech-as-a-service arm that could extend services to startups, allowing them to build faster.

“We see this technology as a service feature to help startups solve their problems so quickly and cheaply. We are also developing our rolodex of service providers who can work with them, because the founders are clearly not experts in every field,” she said.

Kenyan LPs

Muhia said FrontEnd is in talks with a number of institutions and high-net-worth individuals (HNWIs) in Kenya to join the current list of investors, which currently includes executives in the banking, real estate and manufacturing industries.

“Our fund is backed by Kenyan LPs, and what I like about those who have committed is that they understand the need to support new local businesses.”

She further notes that there is a need to educate more HNWIs about the potential of investing in startups. Demystifying the ecosystem, she says, is critical to unlocking more local funding.

Right now, startups in Africa are primarily driven by the inflow of foreign investment from venture capital funds in the US, Europe and Asia as the appetite for opportunity in the continent continues to grow.

The amount raised in the first half of the year also more than doubled to more than $3 billion compared to a comparable period last year, according to Big Deal data. And it’s likely Africa will have another record year as inflows continue to climb.

Last year, startups in Africa raised nearly $5 billion, double the investment from the previous year and nine times as much as five years ago. However, this amount remains disproportionately favorable – especially in Kenya – North American and European founders.

FrontEnd hopes to be part of a drive to channel more money to local founders.

“We must support local founders, because these are people who are going to completely change the face of our country and continent. Our job is to make sure they are familiar with math and economics. And I’m pretty sure if we manage to get a few more investments done and we have something more tangible to offer them in the coming months, a lot more people and startups will join us.”

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