Novastar Ventures, a venture capital firm focused on African startups, has closed its third fund, raising $147 million for its Africa People and Planet Fund III (NVIII), slightly below its original $200 million target.
This fund marks a 40% increase from its predecessor, Novastar Ventures Africa Fund II (NVAF II), which closed at $108 million in May 2020. Unlike its earlier funds, which focused on backing startups in East and West Africa, this new fund will deploy capital across the continent, targeting opportunities wherever they arise.
“Novastar’s investment approach has always focused on transformative businesses that generate lasting financial, social, and environmental value for the common good,” said Andrew Carruthers, Co-founder and Managing Partner at Novastar. “NVIII is a natural progression of that strategy, leveraging over a decade of experience backing businesses addressing Africa’s biggest challenges, while driving a sustainable development pathway for Africa, and the world.”
The fund draws capital from a mix of new and returning investors, including international development finance institutions, such as British International Investment, Norfund, Swedfund, Proparco and COFIDES. A notable feature in Novastar’s third fund is the influx of capital from Japanese institutions, including the Japan International Cooperation Agency (JICA), SBI Holdings, Sumitomo Mitsui Banking Corporation (SMBC), Mitsubishi Corporation, and Mitsui O.S.K. Lines.
According to Brian Odhiambo, partner at Novastar, the firm had already co-invested with Japanese institutions in several portfolio companies before raising this fund. What was missing, he said, was structure: a clearer pathway to channel that capital into the ecosystem.
“We saw an opportunity to try to build what we call the Japan-Africa bridge to channel that capital into assets in Africa,” he told TechCabal. “Their interest is in looking for growth, whether it’s commercial opportunities, strategic opportunities, or earnings.”
The fund will invest across stages, typically entering at pre-Series A through Series B, where companies have achieved early product-market fit but still carry significant risk. Initial cheque sizes will range from $1 million to $8 million, depending on the stage and size of each round. Some of that capital has already been deployed, as the fund has already backed six companies, including food delivery platforms Chowdeck and Breadfast; electric mobility startups, Greenwheels and ARC Ride; smartphone distributor, MoPhones; and climate-focused agritech company, Sistema.bio.
Odhiambo said the focus of this third fund is on businesses that solve large-scale problems while generating climate and social impact, rather than concentrating on a single sector. This means the fund will invest across industries, provided there is a clear environmental or social objective.
The timing of this fund comes as 2026 funding figures show renewed investor interest in energy and logistics sectors, both closely tied to economic activity and climate adaptation.
“Africa could play a big part in solving the global climate crisis,” Odhiambo said. “We’ve seen a lot of entrepreneurs come up with really interesting businesses that are solving different climate problems, and these are venture-backable businesses… there’s nothing about them that makes them any less interesting than traditional sectors.”