Klarna co-founder’s debut fund raises record amount for Africa

Norrsken22 closed its debut fund at an oversubscribed $205m with support from its namesake foundation to invest primarily in sub-Saharan growth-stage companies.

Norrsken22, an African venture firm co-founded by a Klarna founder and a general partner at Northzone, has raised $205 million for what is believed to be the largest first-time VC fund focused on the Mother Continent.

The Cape Town-based firm invests in growth-stage African tech companies with a focus on providing capital to sub-Saharan entrepreneurs.

Natalie Kolbe, Norrsken22

“There’s a thriving venture environment in Africa and there’s some really great investors across the board, but where we saw the gap was in that growth stage,” managing partner Natalie Kolbe told affiliate title Venture Capital Journal. “Businesses, as they’re moving into Series A and later and needing investors that can write $10 million to $15 million checks, the investor base narrowed pretty quickly, and the start-ups were then needing to go offshore for that capital. That’s where we found an open space, particularly for an investor that’s on the ground in Africa.”

Norrsken22 was founded in 2016 by Hans Otterling, who joined Northzone in 2006 and remains a general partner at the European tech investor, and Niklas Adalberth, who co-founded Klarna. Adalberth exited the online payments company in 2016 to establish the Norrsken Foundation, a Sweden-based nonprofit that helps direct investment capital to start-ups addressing issues including poverty, famine, mental health, climate change and pollution. Adalberth reportedly put $125 million, or nearly half of his personal wealth, into the foundation.

The Norrsken Foundation is the anchor LP of Norrsken22’s debut fund and led it to its first close on $110 million in January 2022. Other LPs include British International Investment, the International Finance Corporation, the US International Development Finance Corporation, Standard Bank and Norfund, as well as the founders of 30 unicorns, including Flutterwave CEO Olugbenga Agboola, Skype co-founder Niklas Zennström, iZettle co-founder Jacob de Geer and Delivery Hero co-founder Niklas Östberg, according to press reports.

Bringing in successful founders and other high-net-worth-individuals as LPs was a strategic decision. “They want to use our fund and us to learn more about Africa,” Kolbe told VCJ. “Some of them have businesses that may want to come into Africa at some point, and we’ve also leaned on them as well. We’ve reached out and asked what they think, what the margins should be, what we should be looking for and they enjoy being able to give that back and mentor entrepreneurs on the continent.”

Norrsken22’s fund employs a 2 percent management fee and 20 percent carry. It has also committed 22 percent of its total carry to the Norrsken Foundation, which it will reinvest in the African venture ecosystem, though it is unclear exactly how that capital will be put to use. The foundation recently opened its first entrepreneur hub in Africa, the Norrsken House, in Kigali, Rwanda, to serve as a networking, working and living space for African entrepreneurs.

The firm plans on investing anywhere from $2 million to $10 million with its initial checks to build a portfolio of roughly 20 companies. It is also reserving roughly 50 percent of the fund for follow-on investments in its best-performing companies.

In addition to managing partner Kolbe and founding partners Adalberth and Otterling, the Norrsken22 investment team includes general partners Lexi Novitske and Ngetha Waithaka and investment managers Bernard Ghartey, Nivesh Pather and Maina Murage.

Kolbe said that Norrsken22 has an edge over other investors because it has team members that live in the areas its targeting for investment. “Just as it has happened in the rest of the world, tech hubs have developed around cities in Africa,” she said. “You’ve got Cairo, Nairobi, Lagos, Johannesburg and Cape Town. Those markets are where 80 percent of all tech investment in Africa happens. We’re one of the few, if not the only, firms that have got people on the ground in the Sub-Saharan markets. That is really a differentiator because we understand the opportunity, the risks, who the bad actors and good actors are and we’re able to make that process a little bit easier for portfolio companies.”

Norrsken22’s arrival couldn’t come at a better time for African founders. The African Private Capital Association reports that just $400 million in growth capital has been raised by African funds so far this year, down 65 percent from the same timeframe in 2022. APCA also found that overall deal volume in Q3 2023 for private capital in Africa was down 34 percent from Q3 2022, noting that the decrease was due mainly to a lack of seed and early-stage investments.

Norrsken22 has already backed five companies from its new fund, including digital banking platform TymeBank, B2B e-commerce platform Sabi, automotive commerce platform Autochek and identity management platform Smile ID, in which Norrsken22 co-led its $19.81 million Series B round in February 2023.

Asked about the significance of the number 22 in the firm’s name, Kolbe said, “We added the 22 because it’s the meridian that runs through the centre of Africa, and it actually also runs through Sweden which was perfect.”