Impact investor Goodwell Investments And OxfamNovib, a Dutch foundation and affiliated with Oxfam International, have established Pepea, a €20 million ($21.7 million) fund to provide funding to early stage startups in Kenya, Uganda and Ethiopia. The fund, which was established with the support of Oxfam Novib Impact Investments, will provide venture capital with a focus on mezzanine financing, a debt that can be converted into equity.
Pepea will target early-stage companies that have been around for one to five years and are generating revenue but have not yet raised capital. Goodwell Investments, which will manage the fund’s operations and help develop its portfolio, told businessupdates.org that part of supporting startups will be making sure they have the right “structures and systems” in place to help them thrive. help prepare and raise their first rounds. .
The fund will invest in companies in the sustainable agriculture, energy, clean mobility, logistics and waste management sectors that produce basic goods and services that represent a large portion of household expenditures for lower-income communities. Pepea’s long-term plan is to improve the quality and affordability of these supplies.
The fund focuses on high-impact tech-enabled companies, “because the combination of technology and physical technology works best in these environments. Technology enables access and affordability, both of which are essential for the end users we want to reach, the lower income groups on the continent,” said Goodwell Investments, managing partner, Els Boerhoff.
The fund finances startups in Kenya, Uganda and Ethiopia, markets where Oxfam and Goodwell are present. Development organization Oxfam is running an SME incubation program in the three markets, while Goodwell’s funds are active in both Uganda and Kenya.
Pepea, the impact investor and non-governmental organization’s first fund, will provide an initial check of between $100,000 and $500,000, and follow-on investments of up to $1 million, from Goodwell’s funds.
Goodwell launched its first fund in 2007 and has provided equity financing to more than 20 companies, including Paga, MFS Africa, Sendy, Max.ng and Good nature agro. While it primarily focuses on startups in finance, agriculture and mobility, it spearheaded a $50 million Series C round for e-commerce scaleup Copia Global last year. The impact investor launched its second fund last year, the $154 million Umunthu II, and currently has more than €310 million under management.
On the other hand, Oxfam Novib launched its first investment fund in 1996 and has been offering SMEs access to financing since 2015 through the Impact SME Development (iSME) programme. It plans to further this through the Pepea Fund, through which it hopes to help companies maximize their positive impact within the communities they serve.
“Oxfam Novib played an outstanding role in developing the microfinance sector as a means of providing access to financial services where they were most needed. Now that that sector has matured beyond the domain of NGOs, we are ready to change direction to a less served segment of the market’, says Oxfam Novib, investment manager, Tamara Campero.
“We recognize the challenges faced by SMEs in the region (particularly those owned by women) in accessing finely tuned patient capital and we want to play a role now in meeting those needs,” said Campero.