British International Investment

CRE Venture Capital Fund III A LP

KenyaNigeriaSouth AfricaWest AfricaCommunications & IT services

CRE Venture Capital Fund III is an early-stage venture fund, investing in tech-enabled businesses across Africa. Its objective is to solve structural challenges in African markets by investing in B2B, fintech and marketplace business models with potential for large-scale job creation.

Our investment

Description of the investment.

Our capital will enable the fund to invest in seed stage (and some follow-on early growth investments) of tech start-ups and prove the venture capital investing model in sub-Saharan Africa. Our commitment can help catalyse the early-stage venture capital market by demonstrating its commercial viability and encouraging other stakeholders to replicate the model. Additionally, our commitment will enable us to identify opportunities for future high impact co-investments.

By investing in tech-enabled business models, notably in B2B and B2C fintech companies, we expect the fund to enable significant job creation and reduce market efficiencies, creating lasting impact for employees, consumers and suppliers.

Our commitment at final close will meaningfully support the fund to reach its viable size.

Impact information

Applies to investments made from 2019 onwards. The tabs in this section define what we expect to achieve through the investment, assessing the potential impact of the investment against six dimensions of impact. You can find more details on our methodology of assessing impact here.

What?

Impact
  • Provide income generating opportunities through direct and indirect job creation (SDG 8.5)
  • Provide income generating opportunities via tech-enabled access to market and financial services (SDGs 8.5, 8.10)

How?

Primary Secondary
  • Catalysing markets: Help build a track record and prove the viability of early-stage venture capital markets in Africa, to attract a greater supply of capital to this segment and further unlock economic growth.
  • Direct: Invest in approximately 20 businesses, with potential for large-scale direct or indirect job creation, through B2B, fintech and marketplace business models

Who?

Stakeholder Geography Characteristics
Employees

30 per cent Nigeria, 30 per cent Kenya, 30 per cent South Africa, 10 per cent Egypt

Variable and depends on the types of businesses, although given the technology used, likely to attract high-skilled employees.

MSMEs, suppliers, consumers

30 per cent Nigeria, 30 per cent Kenya, 30 per cent South Africa, 10 per cent Egypt

Variable. The B2C segments will reach a significant proportion of underserved individuals e.g. low-income consumers, micro-businesses, especially through fintech companies. Some B2B companies will indirectly impact low to middle-income consumers.

How much?

Scale Depth/Duration
  • Catalysing markets: Potential for large scale impact i.e. millions of employees and consumers if the fund demonstrates continued viability of early-stage investing.

  • Direct: Potential for high rates of revenue growth and large-scale job creation.

  • Catalysing markets: Likely to occur in the long term (over ten years) if the platform is commercially successful.

  • Direct: Variable dependent on stakeholder characteristics and sector but expected to be deeper in more nascent markets.

Contribution/additionality

Contribution/additionality
  • Financial additionality: The fund would not have closed without our participation given the lack of capacity of other investors in this final close due to the economic downturn and a relatively less developed market. Only one other institutional investor is taking part in this funding round. There is no risk of crowding out commercial capital.

Risk

Alignment Risk

Relates to the risk that capital is allocated to companies or geographies that represent a weaker fit with our impact objectives. However the track record of previous funds demonstrates CRE’s ambition to support our focus markets, and so this risk is minimal and can be tolerated.

Execution Risk

Relates to fundraising, deployment of a third fund, and an early-stage focus. These risks could affect both the catalytic and direct impact. These risks are aligned with commercial risks and partly mitigated by selecting a quality team.

Unexpected Impact Risk

Relates to the risk that businesses, particularly fintech, do not align with customer protection principles especially for underserved customers.

Impact score

Impact score (at point of investment)

The Impact Score is a tool to help us manage our performance against our strategic impact objectives. It is designed to incentivise investments that support our productive, sustainable, and inclusive objectives. You can find out more here.

The Impact Score is published for investments made from 2022 onwards. The Impact Scores are calculated at the point of investment. We publish the Impact Scores of new investments annually, once the information has been externally assured by an independent third party.

6

Environmental and social information

  • Environmental and social summary

    A high-level description of the environmental and social aspects of the investment. This may include a summary of key environmental and social risks identified during environmental and social due diligence (ESDD); key elements of an environmental and social action plan (ESAP); or ways in which we plan to support the investee improve environmental and social standards, such as through their environmental and social management system (ESMS); as well as any other priority areas agreed with the investee.

  • Environmental and social risk

    A risk category rating, which indicates the level of environmental and social risk associated with an investment. For an explanation of the categorisations used, see here. We consistently provide an environmental and social risk category for all investments screened from 2023 onwards.

Environmental and social summary

We agreed an E&S action plan that includes hiring an ESG officer, developing an ESG management system, creating a grievance mechanism and attending E&S training.

Environmental and social risk

Low

Reporting and Complaints Mechanism

The Reporting and Complaints Mechanism allows anyone outside BII to report alleged breaches of the business integrity or environmental and social provisions of BII’s Policy on Responsible Investing. This includes breaches made by BII, a BII investee, or a portfolio company of a fund in which BII has invested. The Reporting and Complaints Mechanism Rules are available here. Reports and complaints can be submitted by email to [email protected] or by mail. See more details on our Reporting and Complaints Mechanism here.

For any other general enquiries contact us at [email protected]

  • Key facts

    First published

    When the investment was first published on the website database.

    :
    January 2024
    Last updated

    When the last quarterly update of the website database occurred.

    :
    June 2024
    Project number

    An identifier number shared by investments in the same project.

    :
    D5286
    Status

    The current status of the investment (green flag for active and red flag for exited).

    :
    Active
    Region

    The geographical region where the country is located. We currently invest in Africa, South Asia, South East Asia and the Caribbean. In 2023, BII’s investment mandate was extended allowing it to invest in regional funds linked to Ukraine, with the majority of activity expected to begin post-war. Investments outside these regions were made prior to 2012 under previous investment mandates.

    :
    West Africa
    Sector

    We prioritise those sectors that facilitate development and need our capital the most. Our priority sectors contribute towards many of the Sustainable Development Goals. They range from investing in the power infrastructure that will provide people with better access to electricity, to investing in financial institutions that direct capital to the individuals and businesses that need it the most.

    :
    Communications & IT services

    We provide capital in the following ways: directly – through direct equity, direct debt, guarantees and other non-intermediated financial instruments; and indirectly – principally through investment funds.

    For direct investments and fund investments, this is the date BII committed capital to the investments. This is typically the date on which legal agreements are signed by all parties.

    For the portfolio companies of our fund investments, this is the date (either the month or the quarter) on which the fund committed capital to the portfolio company.

    For direct equity investments, this is the date at which British International Investment exited the investment.

    For debt investments, this is the date at which the final debt repayment was made.

    For funds, this is the date at which the fund was terminated.

    For underlying fund investments, this is the date at which the fund manager exited the investment.

    The total amount committed, per financial instrument, per investment, on the date BII becomes subject to a binding legal obligation to provide funding or assume a contingent liability. This information is provided in US dollars.

    For direct investments, this is the amount that BII has committed to the business or project. For fund investments, this is the amount BII has committed to the fund.

    The currency in which the investment was made.

    Investment type :
    Fund
    Start date :
    August 2023
    Amount :
    $8m
    Currency of investment :
    USD
    Fund Manager:
    CRE Venture Capital
    Domicile

    The company or investment fund’s place of incorporation.

    :
    USA

Investments made by this fund into companies:

Investment name Country Region Sector Start date Status
CutStruct Technology Limited Nigeria West Africa Communications & IT services February 2024 Active
OJM Resources Inc. Nigeria West Africa Communications & IT services February 2024 Active
Sava Technologies, Inc. South Africa Southern Africa Communications & IT services February 2024 Active
Sukhiba Inc. Kenya East Africa Communications & IT services February 2024 Active

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