Africa-focused venture capital firm LoftyInc Capital has reached the first close of its third fund, LoftyInc Alpha, at $43 million, with plans to invest in late-seed and Series A startups across the continent. This comes as funding deals and volumes in Africa saw only a slight dip last year, according to a report by VC firm Partech.

Unlike its earlier focus on pre-seed and seed stages, LoftyInc Alpha will target late-seed and Series A startups, while retaining its geographical focus across Nigeria, Egypt, Kenya, and Francophone Africa. Founder and managing partner Idris Ayo Bello told TechCrunch that the fund will bridge the significant gap in Africa's startup ecosystem, where many startups struggle to graduate from pre-seed to Series A.

The first close attracted a diverse group of limited partners, including sovereign wealth funds from the Middle East and Africa, development finance institutions, African high-net-worth individuals, and European family offices. This diverse investor base will provide LoftyInc with a strong foundation to support its portfolio companies.

Bello, who launched LoftyInc's first investment vehicle in 2012, has witnessed Africa's tech evolution firsthand. His firm has backed startups through various phases, from startup diversification beyond fintech and the rise of tech talent to the unicorn boom of 2021 and the current funding slowdown. LoftyInc's pre-seed vehicle, run by an angel network, laid the foundation for the firm's first structured venture fund five years later.

In 2017, LoftyInc raised its first institutional fund at $1.1 million, exclusively from high-net-worth individuals, and fully deployed it in Nigeria. The fund delivered a 5.7x DPI (cash return) to its investors, driven by exits and secondaries from Flutterwave and General Atlantic-backed healthtech startup Reliance Health. By 2021, LoftyInc launched its second VC fund, initially targeting $10 million but closing at $14.2 million, which expanded beyond its market scope outside Nigeria and took a pan-African approach.

With its third fund, LoftyInc is refining its investment strategy to tackle the significant challenge in Africa's startup ecosystem: the low graduation rate from pre-seed to Series A. Bello notes that while LoftyInc's angel networks and micro funds have helped cover pre-seed and seed rounds, the real funding gap emerges at the late-seed stage, where startups need structured support to scale and secure Series A capital.

LoftyInc differentiates itself in the crowded early-stage investment market in Africa by leveraging its partners' operational expertise and networks. With over 200 investments and 14 exits, the managing partner posits that the firm provides more than capital, offering market access, business development support, and investor matchmaking to its portfolio companies.

The firm has expanded its leadership team with its latest fund to keep up with its evolving strategy and growing portfolio. Mariam Kamel and Kevin Simmons have joined as general partners, bringing investment banking, angel investing, and operational VC experience across the Middle East and Africa to help deepen the firm's presence in Africa's east, north, and Francophone regions.

LoftyInc Alpha says it's backing innovations that drive Africa's "everyday economy." Most of that will revolve around financial services, logistics and transport, healthtech, retail, climate, and deep tech and AI, where they apply as enablers across the other sectors. The firm's portfolio spans notable startups, including Uber-backed vehicle financing platform Moove, Egypt's Robinhood-style trading app Thndr, and African B2B e-commerce platform OmniRetail.

As LoftyInc Capital continues to grow and evolve, its focus on late-seed and Series A investments is expected to have a significant impact on Africa's startup ecosystem. With its third fund, the firm is well-positioned to support startups in scaling and securing Series A capital, ultimately bridging the gap between early-stage funding and growth-stage investments.