Pan-African VC, P1 Ventures launches $50M fund to back early-stage startups

P1 Ventures, a Pan-African Seed VC fund has completed the first $25 million close of its second fund worth $50 million. The fund will back startups serving in e-commerce, fintech, insurtech, health tech, and SaaS and AI industries.

Founded in 2020 by Mikael Hajjar and Hisham Halbouny, P1 Ventures describes itself as “a high-conviction investor that intentionally focuses on a small number of exceptional African founders and companies building transformational software businesses with regional and global potential”.

Since its launch, P1 Ventures has invested in 29 early-stage companies across 10 countries including Money Fellows in Egypt, and Reliance Health in Nigeria where P1 has a presence. The firm’s inaugural investment was in Yassir in Algeria – a super-app operating in Francophone Africa. More recently, P1 Ventures led the Seed round of Gameball, a software company gamifying loyalty and customer retention with an international client base across 70 countries. 

For every $1 invested, P1 Ventures’ portfolio companies have gone on to raise 35x more follow-on capital, on average, the VC firm claimed in a statement seen by Bendada.com. Yassir recently announced the closing of  $150 million in a Series B funding round.

According to Noureddine Tayebi co-founder and CEO of Yassir, “P1 Ventures was one of the most hands-on Seed investors we had: Mikael helped us source GM candidates to expand, recruit a Strategy Lead from Lyft, introduced us to Emil Michael, the former Chief Business Officer at Uber, and most importantly reinvested in every single round including our last Series B.”

“As far I know, I’m the first Mauritanian who’s ever launched a fund,” Mikael claims. “Coming from a relatively small economy inspires us at P1 Ventures to go off the beaten path and back the underdogs. We love ambitious African founders who build products and services addressing a regional, if not global, customer base. Combining our deep local knowledge, our strong data orientation, and our experience as investors, we can identify unique opportunities and help entrepreneurs become global winners.”

“Every globally minded asset allocator has been actively seeking exposure to the continent. We’ve witnessed similar inflection points in other regions, such as Europe and Latin America, where leading VC firms like Index and Kaszek Ventures have emerged,” Hisham added.

P1 Ventures sees an AI opportunity in Africa

“We believe that AI will be Africa’s next big leapfrog opportunity. So when you think how fintech transformed the continent and allowed it to disrupt the banking sector, we believe AI will do the same with sectors like retail, healthcare, and the creative economy,” according to Hajjar.

“What we see beautiful in AI is the ability to export. As you know, single market and currency risk are the main risks in investing in Africa. The beauty of AI is that you have export-first businesses.” — Mikael Hajjar

P1 Ventures recently launched an Entrepreneur-in-Residence program and seeded Senegalese startup Nkoloso, which gathers data and keeps track of vast tracts of agricultural land using satellite imagery and AI. The company provides a wide range of applications, including tracking crop acreage and yields for credit and insurance underwriting, as well as calculating the value of timber and carbon credits. 

P1 has also identified an opportunity for the pan-African region to use AI to drive legacy infrastructure, particularly in antiquated sectors such as agriculture and FMCG retail. Just as mobile money in Africa enabled debit and credit card infrastructure, AI can build high-fidelity data and enhance the time-to-value proposition to transform sectors.

While AI is a huge opportunity for the continent, it can also accelerate the distribution and potential of venture capital, if used strategically by investors with deep knowledge. P1 Ventures is embedding AI in its own workflow to source deals and augment its investing team, helping the firm have even greater reach in a region where information and data are notoriously scarce.

Funding for the sector in Africa has plummeted 98% compared to H1 2022, according to BD Funding Tracker. Globally, AI funding plunged 43% in Q1 2023, compared to the same period in the previous year, CB Insights says it's the lowest quarterly total since Q1 2018.

Although the current VC funding in the sector reflects a lag, AI could expand the African economy by $1.5 trillion by 2030—about 50% of its current GDP—if it is able to take over 10% of the global AI market, according to a report by Africa Regional Science, Technology and Innovation Forum.

“Innovation across the African continent is booming and P1 is ideally positioned to help African entrepreneurs at the earliest stages build a valuable and enduring business,” senior advisory committee member Bernard Dalle said.