In 2023, Norrsken22 closed its debut African tech growth fund at $205 million, surpassing its initial $200 million target despite challenging global venture capital conditions. The oversubscribed fund, backed by more than 30 unicorn founders and major institutional investors including British International Investment, the International Finance Corporation, the U.S. Development Finance Corporation and Norfund, marked a significant vote of confidence in Africa’s growth-stage technology companies.
Lexi Novitske, the firm’s General Partner based in Lagos, Nigeria, has been instrumental in building Norrsken22’s presence across the continent. With offices spanning Lagos, Nairobi, and South Africa, the firm has rapidly deployed capital into 17 portfolio companies, including fintech unicorn TymeBank and identity verification platform Smile ID.
Novitske sat down with Charles Rapulu Udoh of Launch Base Africa to discuss the fund’s progress, the realities of scaling tech businesses across African markets, and the complex landscape of regulatory uncertainty — particularly in Nigeria. As Norrsken22 enters its final year of primary deployment, this conversation provides a timely assessment of where African tech investing stands today and what lies ahead.
Launch Base Africa: The Norrsken22 team has had a busy year, starting with key deals like Stitch. It included your move to Lagos, investing in Raenest, and adding an Egyptian social commerce platform. Overall, how would you describe the team’s year?
Lexi Novitske: It has been quite busy. We have made several additional investments behind the scenes that we haven’t publicly announced yet, so unfortunately, I can’t share the specific names. In total, our portfolio now includes 17 companies. To put that in perspective, our total aim for the portfolio is likely about 25 companies. We are therefore nearing the end of the investment period for the entire primary portfolio and will continue to deploy capital into follow-on rounds for our existing investments at that point. We likely have about one more year of deployment into new companies, depending on our pace.
Launch Base Africa: What does Norrsken22’s current African expansion strategy look like, specifically in terms of the countries where you are now based?
Lexi: We currently have three offices on the continent. I’m based in Lagos with the West Africa team, covering all of West Africa, including Francophone Africa, and some of North Africa as well. We also have a team based in Nairobi and a team based in South Africa. We are actually in the process of growing our team in Egypt too, hiring team members there to help support the deal flow because Egypt is a super interesting market right now. We’re seeing a lot of exceptional deal flow coming out of there.
Launch Base Africa: In 2023, your team raised over $200 million for its debut fund, exceeding its initial target. How far along is the capital deployment? You mentioned new and follow-on investments — does this mean you have roughly one year of deployment remaining?
Lexi: No, not exactly. Our fund model is structured to allocate about 60% for primary investments (new companies) and another 40% for follow-on investments in existing portfolio companies. If we maintain our current deployment speed, we will probably have that primary portfolio mostly built out by the end of next year. However, we keep a substantial portion of the capital to continue backing our existing portfolio companies, so you’ll see that 40% continue to be deployed into that primary portfolio over time. That is how the fund is structured. We’ll likely continue with the same sort of strategy for the next fund. You should expect us to deploy another fund in some shape or form to continue being active in the market even after the primary portfolio is built out.
Launch Base Africa: What is the likely target size of the next fund, and given your focus on growth-stage companies with the debut fund, do you intend to expand your investment mandate?
Lexi: It is too early to indicate a specific timeline or size, as it depends on our deployment speed over the next year. However, our strategy has worked very well for us. We’re in a sweet spot in the market where there aren’t many growth-stage investors. Therefore, we will very much continue to be active with the existing strategy. The focus will remain very similar: Series A through C companies, with an opportunistic vehicle to look at some early-stage opportunities as well. Our mandate and investment in the same anchor markets will also stay very similar.
Launch Base Africa: Given the fund’s focus on growth-stage (Series A/B) and the positive funding trends in this segment, Africa is a strong market for Norrsken22. While the fund’s thesis targets fintech, edtech, medtech, and market-enabling solutions, we’ve seen a clear emphasis on fintech deals. Could you describe the composition of your portfolio outside of fintech?
Lexi: We are still seeing a lot of growth-stage, highly scalable business models in fintech, and that is where most of our portfolio capital has been invested. But we’ve also been quite active in the market enablement subsector, which encompasses retail, trade, and logistics. Our current pipeline actually holds some opportunities that will increase our exposure in this subsector within our existing fund.
Regarding the healthtech and edtech spaces, we’ve actually broadened that mandate a little bit more to cover “Next Gen Access,” which includes high-impact sectors that increase access for the broader population. This still includes healthtech and edtech, but we are also encompassing agritech and clean energy solutions. We’ve done one deal out of that bucket which we haven’t announced yet, but it will be very much along the lines of clean energy and EV mobility.
Launch Base Africa: Do we expect these investments outside of fintech perhaps within the next one to three years?
Lexi: We’re starting to see a bit of evolution, especially in the healthtech subsector. There might be some companies relevant to our mandate — meaning growth-stage, highly scalable, lean tech models — that we’ve been tracking for some time that will certainly be investable at that point. We’re certainly seeing quite a bit of interest around retail and that market enablement/supply chain solutions subsector. So there will be a lot more very interesting deals that come out of that space in the coming years.
On the fintech side, there are still incredible opportunities and companies that are scaling quite rapidly. Frankly, even in spaces that seem highly competitive, like payments, fees are still really high in our highly fragmented market. Many of the solutions out there don’t always work well. There’s still a huge amount of opportunity even in that space. So we will continue to be active in fintech, but you’ll probably see us start to focus on other verticals such as stablecoin-based cross-border trade, cross-border payments, and AI solutions that deepen access and reduce fraud in financial services. It’s still a very active space, but you’ll see a lot more new, novel, and “next-gen” technologies going forward.
Launch Base Africa: Since its launch in 2023 and subsequent deployments, what key insights have you gained so far about investing in African tech — particularly regarding geographic strategy, and broader market conditions?
Lexi: The biggest learning regarding difficulty in our portfolio has been that it’s much harder to expand cross-border, especially within Africa, than you expect. Interestingly, we’ve seen some of our portfolio companies expand very successfully to Asian markets. Some of the Asian markets — Pakistan, Philippines, Indonesia — actually have market dynamics more similar to some of the large African markets than some of the smaller African markets do.
The second learning concerns fintech models that are highly dependent on the availability of debt capital. There is just such a limit on debt capital, especially outside of Nigeria. Nigerian banks are actually quite a bit more progressive than other African markets, but this inherently limits scale and growth and has been a huge ceiling on the growth trajectories of these companies. It hasn’t been about demand or customer acquisition; it’s really just been about the availability of debt. This applies to companies with an embedded finance product, credit as part of their business model, or even a need for float capital — meaning if they’re a payments company requiring 24-hour settlement, that’s been a big bottleneck.
Lastly — and this won’t surprise you, but it’s especially an issue in Nigeria now — is regulation. It’s the lack of pragmatism in regulation fit for current markets. A big thing we’re watching is the new tax bill in Nigeria that comes into effect on January 1st. There’s a huge capital gains tax for international investors in Nigeria. When you start to look at the risk of the market, potential currency devaluations over a 10-year holding period, and a capital gains tax that’s north of 20%, it starts to make the investment opportunities quite uninvestable. That’s something we were very disappointed about. Certain regulations have really been a shock to some of our investments and make investors like us look closer at the risk and reward opportunities.
Launch Base Africa: On a more personal note, having worked closely with numerous founders, what key learnings have you gained about them? What truly sets exceptional founders apart?
Lexi:The founder profile that works very well at early stages doesn’t necessarily transition as well to growth stages. That’s something we’re quite mindful of. In early-stage tech companies, the founders who succeed are typically very technical, able to build a fantastic product with little capital, and often have a large community of early adopters.
By the time they get to Series A, and especially Series B, what matters more is not necessarily their technical ability or even their storytelling ability (selling the vision and the mission). It really comes down to two key factors: Are they good salespeople? Do they understand the product well enough, and can they onboard large enterprise customers, or do they understand how to acquire mass consumers? Do they have a strong go-to-market strategy? Do they have the management skills and mentality to hire and attract the best quality talent that can really scale up the platforms? A lot of times, those sorts of skills are not necessarily the ones that made a company succeed in the early stages.
Launch Base Africa: Many founders are eager to connect with Norrsken22 as a strategic partner in the coming years. From your experience, what guidance would you offer them on the best way to approach the firm?
Lexi: We are quite available to meet founders and engage with them. We recommend to all founders looking for investment to really understand what firms like ours look for and our mandate. For example, we receive a ton of emails from pre-seed companies. As mentioned, we’re growth-stage investors, so those typically wouldn’t fall within our mandate.
It’s super helpful if you come via a referral from another founder we have a close relationship with, who can speak highly of you as a person and has experience engaging with your platform. We would also love to build relationships with founders quite early. A lot of times that will mean we don’t invest until you’re generating one or two million dollars of revenue per year, but we do like to build relationships early. You can put us on your newsletter; that keeps us up to date on how those numbers progress.
Launch Base Africa: As a growth-stage investor focused on Series A and B, what does your typical investment process look like? You’ve partnered with U.S. and strategic investors recently — what type of investors do you prefer to co-invest with?
Lexi: We love to work with international investors that specifically have a sector focus but maybe lack the mandate to look locally. This means they’ve invested in business models like the one we’re investing in but in other markets like Latin America or Asia and will have a lot of learning to bring to the table. Some of those partners might be, for example, QED on the fintech side, who has a lot of those global investments.
We also like to co-invest with strategic investors — investors who have a lot of experience in either building similar models in other markets or can bring things like compliance expertise, infrastructure, and sometimes availability of debt capital. For example, we’d love to work with banks — both neobanks and traditional bank investments.
On the question regarding the deal process: It varies very much by stage and company performance. In some situations, we would love to do an off-market deal where the company isn’t necessarily going out for a formal capital raise, but we’ve seen really interesting numbers materialize. We tend to know the founder for quite some time, and then we’ll take the opportunity to build an off-market transaction. That’s great for the founder because it means they don’t have to spend lots of time in the market fundraising and can keep their head down building and running the business. Our typical investment range is $4 to $10 million for an initial check. On average, we’ve done probably $5 million as our initial investment.
Launch Base Africa: From start to finish, what is the typical timeline for a founder to close an investment round with your firm? Would you estimate it to be around six months, or could it extend to a year?
Lexi: Our typical deal doesn’t take that long. It varies. We’ve had transactions that have taken three months to close, usually because things came up in due diligence. But we’ve also done transactions in a month.
Launch Base Africa: With so much activity, innovation, and evolving trends across Africa’s tech landscape, what are your key expectations for the coming year? What are your estimates and outlook for African tech and investment in 2026?
Lexi: I think first half of the year will be quite slow, especially in growth-stage deals, just from what we’re seeing in the pipeline in some markets. It will probably be more active in Egypt and South Africa. However, you’re seeing quite a few of the higher-quality early-stage funds close their vehicles, so probably by the second half of the year, you’ll see some of that start to pick up.
You’ll see a lot more interest in business models that are scaling across not only Africa but the Middle East as well. And of course, a lot more interest in earlier-stage AI-driven models. There will also be some really interesting growth-stage payments companies. You still see a lot of that this year, but that will continue into next year as well with some of those larger mega rounds.
We’re quite hopeful that you’ll also see a couple of interesting exits, again, particularly in Egypt and South Africa. South Africa had a really great IPO exit with Optasia. The macro environment in Nigeria will start to bring some interesting investment back, but again, a lot of this regulatory uncertainty will probably keep risk-averse investors — especially international investors — on the sidelines.
Launch Base Africa: Given the significant capital flowing into Africa across various sectors and geographies, what have been your most important lessons in venture investing?
Lexi: I think frustratingly, valuations have just been far too high and continue to be. It’s really hard to make strong returns given all the volatility. That’s a big reason why you’re not seeing a lot of deals getting done at the pace they were before. Valuations are still anchored on far too high expectations, and the investment community and founder expectations are just not meeting. That’s unfortunate. Hopefully, that will correct because we would love to see more capital going into building some of these really high-growth, scalable platforms. But we also have to be mindful that exit profiles need to match where we’re investing in terms of valuations today.
Generally, investing in Africa is still a rocky ride, but the growth curve is up and to the right. Very high expectations exist given all of the factors around population, the problems that need to be solved by tech, and hopefully, forward-looking stability that will start to really unlock some of these exceptional outcomes for investment.
Launch Base Africa: Exits are a critical component of the venture capital model. Could you outline Norrsken22’s envisioned exit strategy?
Lexi: It really depends on the company specifically. In some cases, we’ve identified strategic acquirers and built relationships with them and the companies. So those are coming. We wouldn’t expect an exit in the next year or two as our portfolio is still quite young, but those relationships are being built. Sometimes they also come in as strategic investors in the company themselves. Some really interesting IPOs have emerged in both Egypt and South Africa. Those markets still show promise for listing exits — Egypt, South Africa, and even Morocco. Those markets are kind of starved for lean businesses, so we see quite successful IPOs in those markets.
Launch Base Africa: Great speaking with you today, Lexi. We wish you all the best on your journey.
Lexi: Thank you so much for having me.
