CAIF: Final close of Pan-African Fund at €110M 

CAIF: Final close of Pan-African Fund at €110M 

TECHDIGEST- Cathay AfricInvest Innovation Fund (CAIF), a Pan-African fund launched through a collaboration between AfricInvest, a multi-asset investment platform in Africa, and Cathay Innovation, a European-born but global-focused venture capital firm, has completed a €110 million final close.

Cathay Innovation recently announced plans to raise €1 billion for its third fund, which will invest in growth and later-stage companies across Europe, North America, Latin America, and Asia. The fund has launched two sister entities in the last three months: a $110 million crypto fund and a $500 million health fund.

Cathay Innovation offers an alternative in Africa. Whereas in other regions where the firm invests from its multistage fund and ventures on its own, it partnered with Tunisian-based AfricInvest in 2019 to back promising early to growth-stage startups on the continent.

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AfricInvest, founded in 1994, manages a wide range of asset classes, including private equity, venture capital, and private credit. Over the last two decades, the firm has raised more than $2 billion across 21 funds. Its 200+ portfolio companies, of which 106 have exited, are spread across 25 countries. Cathay Innovation, which has $2 billion in AUM and offices in San Francisco, New York, Paris, Shanghai, Beijing, and Singapore, sought a track record like this four years ago when it bought firms.

CAIF officially confirmed its first fund in 2019. It was looking to raise $168 million at the time for Series A to Series C investments. While the final close of the fund suggests that fundraising plans did not go as planned for a variety of reasons, Denis Barrier, co-founder and CEO of Cathay Innovation, said that CAIF adjusted its expectations and settled on raising €100 million. “So, in fact, we exceeded this fundraising target,” he said.

The CEO also emphasised how CAIF’s support of early-stage founders enabled the firm to shift its strategy and reaffirm its initial conviction of making seed to Series A deals. However, it has also made some bets at a later stage. According to a statement, the firm will invest up to €1 million in seed capital.

Yassine Oussaifi, a partner at AfricInvest and co-head of CAIF, said the firm backs startups with “strong” unique selling propositions (USPs) and helps them to become regional leaders before they pursue global ambitions. It’s a step-by-step the partner narrates. Africa is a big but fragmented market. As startups need to expand from their home countries to another — for instance, Lagos to Nairobi or Cairo to Casablanca — to achieve massive scale, the importance of firms like CAIF with resources on the ground cannot be overstated. But beyond these continental borders, utilizing Cathay Innovation’s network is critical.

CAIF, like many other funds in the first half of this year, is closing its fund amid a venture capital slowdown and an economic downturn. Barrier responded to how the firm approaches investments during this time period, saying, “In our portfolio, we see companies with good metrics that continue to expand.” So, even if valuations fall, the fundamentals of digitization and innovation in the next ten years are more relevant than ever. So we will continue to be very confident in what we are doing. We might be concerned if our portfolio companies stop doing business and do not grow. But that is not the case.”

Oussaifi, giving his thoughts on a broader context, believes the venture capital slowdown is a short-term event in Africa. As long as the tech ecosystem continues to evolve and diversify from fintech and the Big Four to other sectors and regions, startups will continue to raise money to grow and scale, he said.