Launch Africa, a pan-African venture capital firm with over 180 portfolio startups, has returned $2.5 million to investors in its first fund following 11 exits. This marks a rare instance of liquidity being returned to limited partners in the African venture capital landscape, where fund exits have largely stalled since the 2022 market downturn. The $36 million fund achieved a distributed to paid-in capital (DPI) ratio of roughly 7%, with five full exits and six partial exits. Of these, eight were secondary sales to other investors, while three involved trade sales or management buyouts. One exit in Egypt constituted a majority takeover, with a buyer acquiring 50% plus one share. The largest return on a single investment was 5x, and no position returned less than 1x. Sectors represented in the exits include fintech, payments infrastructure, agritech, logistics, B2B commerce, HR software, and employee wellness. The exits span six countries: South Africa (three), Nigeria, Ghana, Senegal, Tanzania, and Egypt. Fintech accounts for about 40% of the fund's portfolio, mirroring its dominance in the exit mix. Peach Payments, a South African fintech, was one of the notable exits, with Launch Africa selling its stake during a Series A round to a prominent local investor. Another contributor to the returns was Gem HR, where a corporate investment from Old Mutual Investments encouraged follow-on funding and enabled a stake sale. Managing partners Zachariah George and Janade du Plessis explained that the decision to return capital in year five—before the fund's typical 10-year horizon—was strategic, prioritizing early returns over waiting for maximum valuations. The firm's "no follow-on" strategy in fund one, which limited additional investments in existing portfolio companies, simplified exit decisions. Launch Africa's performance places it ahead of more than half of global venture funds from the same vintage in terms of DPI.
Returning $2.5 million from a $36 million fund means most investors are still waiting for the bulk of their capital to be returned, despite the celebratory tone around exits. Eleven exits yielded only a 7% return, far below the 2x to 3x target expected of venture funds. For African LPs, this reinforces that early wins don't yet translate to meaningful returns.
Editorial note: AI-assisted opinion, not established fact. Full disclaimer →
