African startups seeking millions of dollars in growth capital need more than an impressive product or a promising idea. For Norrsken22, the investment decision also hinges on the founders’ ability to collaborate, the size of the market they are targeting, and their willingness to work openly with investors when challenges arise.
Bernard Ghartey, a principal at the Africa-focused investment firm, has offered insights into how the fund evaluates businesses, where it sees opportunities across the continent, and what entrepreneurs should understand before approaching it for financing.
Established in 2022 with backing from the Norrsken Foundation, Norrsken22 provides growth equity to technology companies aiming to build substantial businesses in Africa and beyond. Its investment focus spans financial technology, market enablement, medical technology, and education technology.
A founding team that works with investors can stand out
While conventional investment considerations such as unit economics, industry expertise, and product-market fit remain important, Ghartey identifies the relationship between founders and investors as a particularly significant factor.
He believes businesses are better positioned to navigate difficult periods when their founding teams are receptive to collaboration and willing to work closely with their financial backers.
Market size is another major consideration. In Ghartey’s view, a product does not necessarily have to be flawless to succeed if it serves a sufficiently large market. Conversely, even an excellent product may struggle to deliver substantial growth when its potential customer base is too limited.
This means founders need to demonstrate not only that their solution works, but also that a significant commercial opportunity exists for it.
Why Norrsken22 looks beyond Africa’s biggest startup markets
Nigeria, South Africa, Kenya and Egypt continue to attract a substantial share of venture investment across Africa. Norrsken22 invests in these established technology markets but also searches for opportunities in other countries that could emerge as the continent’s next major startup hubs.
The fund is interested in markets with large populations, expanding addressable markets, and economic activities that are ready for digitisation.
Rather than restricting its attention to particular countries, it evaluates whether technology-driven business models can address meaningful problems and scale across markets.
Its four priority sectors are fintech, market enablement, medtech and edtech. Ghartey also points to opportunities where technology intersects with the wider economy, including commerce, international payments and mobility.
These sectors appeal because digital solutions can improve the way everyday economic activities are conducted.
From Series A to Series C, with room for early-stage scouting
Norrsken22 primarily backs companies that have moved beyond the earliest stages of development. Its typical investment window runs from Series A through Series C, reflecting its position as a growth-stage investor.
However, the firm also reserves part of its resources for identifying promising businesses earlier in their journeys.
This scouting allocation allows the team to build relationships with founders before their companies reach the fund’s usual investment stage. It also gives Norrsken22 the option to consider backing those businesses as they mature.
For founders seeking capital, the firm’s usual entry point is therefore growth-stage financing, although early engagement may create opportunities for a longer-term relationship.
How much funding can startups expect?
Norrsken22 can invest between $2 million and $10 million in an initial cheque, with investments of $6 million to $10 million representing its preferred range.
The fund has invested in 19 companies to date. Its portfolio includes Yellow Card, Nala, Raenest, GoTyme Bank, Stitch, AutoChek, Orca and Arc Ride.
These investments reflect its interest in businesses using technology to improve financial services, commerce, mobility and other parts of the African economy.
Ghartey says the firm also has a pipeline of potential investments it hopes to bring into its portfolio.
Transparency and the ability to change direction matter
Norrsken22 expects founders to recognise when a business strategy is not delivering the desired results. Ghartey warns against the tendency to continue investing in an unsuccessful approach simply because considerable time, money or effort has already gone into it.
He describes the ability to change course when circumstances demand it as an important entrepreneurial strength.
Communication with boards and shareholders is equally important. Founders who attempt to manage serious business problems without informing their investors risk losing access to people who could help them resolve those challenges.
Ghartey encourages entrepreneurs to raise concerns early rather than wait until a difficult situation becomes harder to manage. Investors, he argues, should be treated as partners who can provide support during periods of uncertainty.
Learning from unsuccessful investments
For venture capital firms, not every investment will produce the desired outcome. Ghartey views these setbacks as an inherent part of the business model rather than a reason to abandon the investment strategy.
He compares recovering from an unsuccessful deal to golf: after a poor hole, the priority is to move forward and concentrate on the next shot.
The broader objective is to identify investments capable of delivering significant returns while learning from those that fail to meet expectations. Over time, that process should help the fund limit downside risk and improve its decision-making.
Missed opportunities also provide lessons. Rather than dwelling on companies the fund chose not to back, Ghartey says investors should examine what they overlooked and use those insights when evaluating prospects.
The team behind Norrsken22
Norrsken22 emerged from the coming together of three groups with complementary experience in African technology investment, global technology businesses and private equity.
Ghartey had previously invested in early-stage businesses at Acuity Venture Partners. As that fund completed its investment deployment, work began on raising a potential third Acuity fund.
At around the same time, the teams associated with Lexi Novitske, Hans Otterling, Niklas Adalberth, Natalie Kolbe and Ngetha Waithaka converged around a shared interest in African technology.
Novitske, Acuity’s founder and general partner, brought experience backing early-stage African startups. Otterling, associated with Northzone, and Adalberth, associated with the Norrsken Foundation and Klarna, contributed experience in building and investing in technology businesses.
Kolbe and Waithaka, both former senior leaders at Actis, added experience in private equity operations and governance.
Their combined backgrounds helped establish the investment firm in 2022.
How founders can approach the fund
Entrepreneurs interested in securing investment from Norrsken22 can make an initial approach through LinkedIn, which Ghartey identifies as his preferred point of contact. He recommends sending a concise message explaining the business and what the founder is building.
Alternatively, founders can contact the firm by email at info@norrsken22.com.
Where there is a potential fit between the business and the fund’s investment priorities, the next step may be a short introductory call.
For startups seeking growth capital, Norrsken22’s approach points to three central considerations: build a business capable of addressing a large market, develop a founding team that welcomes collaboration, and maintain open communication with investors—even when the company faces difficult decisions.
Source: Techpoint Africa