After not undertaking any investments between 2011 – 2015 and 2017 – 2020, the government-backed private equity fund of fund investment vehicle, the Ghana Venture Capital Trust Fund (VCTF) has so far committed GHS 173 million (approx. $11.2 million) to investors after its $40 million recapitalization. In between the fallowing periods, the Fund committed capital to Oasis Africa Fund I and the Industrial Support Fund.
The capitalization was made possible through the Ghana Economic Transformation Project, where the government allocated $40 million to revive the VCTF after its primary funding source, the National Reconstruction Levy, was abolished.
The $40 million allocation has enabled VCTF to establish two strategic funds: the Startup Catalyst Fund (SC) and the Strategic Industries Fund (SI). The $20 million SC Fund supports fund managers investing in seed and early-stage startups and SMEs, while the $20 million SI Fund targets closed-ended funds focused on selected strategic industries in Ghana.
Which funds have the VCTF committed to?
Since VCTF does not directly invest in startups but in fund managers, the fund has so far committed capital to 5 private equity investors who will deploy the cash to high-growth startups and SMEs. The selected fund managers include the following.
Oasis Africa Fund II
- Fund Manager: Oasis Capital
- Targeted fund size: $100 million
- VCTF Commitment: $5 million (GHS68.9 million)
- Sector focus: Sector agnostic
- Funding stage: Growth stage
Zinari Women’s Enterprise Fund
- Fund Manager: Zinari Capital
- Targeted fund size: GHS 120 million
- VCTF commitment: GHS35 million
- Sector focus: Gender lens
- Funding stage: N/A
Mirepa Capital SME Fund
- Fund Manager: Mirepa Investment Advisors
- Targeted fund size: GHS 120 million
- VCTF Commitment: GHS30 million
- Sector focus: Agribusiness, Education, Financial Services, Healthcare, and Business Services
- Funding stage: Seed stage
Injaro Ghana Venture Capital Fund
- Fund Manager: Injaro
- Fund size: GHS 216 million
- VCTF Commitment: GHS 25 million
- Sector focus: Food and Agribusiness, Education, Healthcare, Inclusive Financial Services and Industrial Services
- Funding stage: Series A, Growth stage
Wangara Green Ventures
- Fund Manager: Wangara Capital
- Fund size: $10 million
- VCTF commitment: GHS 15 million
- Sector focus: Renewable energy, Waste and Water management, Climate-smart Agriculture, and Energy efficiency.
- Funding stage: Seed stage
GIJ’S POV
The unsown seed: who will save the idea and pre-seed stage founder?
While we applaud VCTF’s recent activities, our analysis reveals a critical gap in the startup landscape: the neglect of the pre-seed stage. Investors providing $50,000 – $100,000 cheques to very early local startups are virtually non-existent in the country, contributing to Ghana’s lagging local tech ecosystem. Currently, 80% of Ghanaian technology-focused startups are at the pre-Series A stage and struggle to raise pre-seed funding to scale. It is rare for local startups to secure more than $1 million in equity, resulting in only a few achieving revenues between $100,000 and $1 million
We know the impending Youth Fund and hope it will be expedited to address this funding gap. Leveraging local capital to de-risk early-stage startups will create a pipeline for institutional investors, mainly investing in growth and late-stage deals.
