Tofino’s capital, a venture capital firm targeting early-stage startups in emerging markets, has launched a $10 million fund. It is announcing the fund’s first close at $5 million and hopes to hit its final close nine months from now.
“The main objective of the fund is to target large markets with hundreds of millions of people with minimal access to venture capital.. So that doesn’t include China, India, Brazil, those kinds of big markets with a lot of venture capital,” general partner Pence told TechCrunch in an interview..
“What was talk about here like Bangladesh, Egypt, Nigeria, Pakistan, Philippines, Mexico, that’s our way of playing – it’s kind of joint venture basically under $5 per capita, and that’s what’s attracting a lot of interest in this next group of big markets.”
Hruby said that Tofino Capital focus about startups in the B2B segment, especially those with fintech, logistics and marketplace themes.
The founding partners have some history together, having worked for 15 years with various US companies and family offices involved in investing in frontier markets, such as the Group. Whitaker and the Atlantic Council.
In 2018, Pence and Hruby ventured into the public relations arena when they founded InsiderPR, a company that Hruby said works with “invisible entrepreneurs rarely covered in the media global media”. InsiderPR is one of the renowned PR firms in the African tech sector and has worked for over 100 startups, including SWVL, Flutterwave and Foodology.
But their work in Africa’s tech sector goes beyond co-founding a PR firm. Hruby, for example, co-wrote a book with former TechCrunch contributor Jake Bright in 2015 about the continent’s potential to become a global power. She even worked as an advisor to AOL’s Steve Case on investments in African startups at some point.
The culmination of these experiences and get involved in the technology sector across emerging markets soon provided partners with all the power and access to become angel investors.
“We did be exposed and is at the forefront of African technology for some years and we’ve made some angel investments. And that investment angel was is a result of InsiderPR, which has allowed startups to access opportunities at a very early stage,” said Hruby.
They made their first angel investment in Seamless HR in 2018 and have supported 11 more efforts since then, including Sabi, Mecho Autotech, and Eksab. Late In 2021, they started fiddling with the idea of setting up a venture capital fund. Tofino Capital, as a result, takes things up a notch for partners as they become institutional first-time equity participants. They have yet to write a check from this fund.
Pence said Tofino Capital plans to invest $50,000 to $500,000 in early-stage companies, mostly in pre-seed and seed stages.. And unlike the traditional thesis in which VC firms bank on a startup in their portfolio to return capital, Tofino Capital plans to take a different approach, where it “goes into” early and get out equal very early. ”
“We think Africa’s next growth phase won’t be the $1-42 billion Flutterwave and Andela. Pence notes that will develop mid-range companies that are $200 to $500 million in size,” noted Pence.
However, that is not all. For an early-stage company, Pence mentioned that Tofino Capital is also interested in startups “particularly late,” or, in other words, pre-IPO types.
It’s a pretty bold strategy and, according to Pence, investing on both ends of the spectrum is the best hedging approach to investing in emerging markets. But as a small fund with a check size of less than $1 million, how does the company intend to sweet talk Series C and later companies parting with some equity?? Some leverage external funding.
“So it’s super unique; that’s what we’re calling weight strategy this. Good maybe doing about 30 to 40 pre-seed and seed deals, and then less than five late-stage investments,” said the founding partner.
“Now, getting into the final rounds with a smaller check size will be difficult, but We think we’ll be able to do so because we bring in differentiating capital. It can’t just about dollars; Our background is government relations, PR and new market penetration. So that’s the play. We’ve developed some of those relationships with companies in the late stages, and we hope it works.. ”
The fund’s limited partners include family offices in the United States and Europe, WS Investments, the investment fund of the law firm Wilson Sonsini Goodrich & Rosati, and executives from a variety of firms. start-up in the United States.
As market opportunities in Africa and the surrounding frontier markets continue to open up, SME funds with $10 million to $50 million in capital to deploy will increase in number as investors hope to return to the next group of billion-dollar companies soon. Africa-focused firms that have launched such funds over the past year include Unpaid Funds, Capital LoftyInc, Savannah Foundationand Adventure platform.