Tofino Capital, a venture capital firm targeting early-stage startups in emerging markets, has launched its $10 million fund. He is announcing the first closing of this fund at $5 million and expects to achieve a final closing within nine months.
the signature, Founded by Elliot Pence and Aubrey Hruby wants to return startups in Africa, Asia, Latin America and the Middle East.
“The main thesis of the fund is to target large markets with hundreds of millions of people who have minimal access to risk capital. That doesn’t include China, India, Brazil, those kinds of big markets with a lot of venture capital,” general partner Pence told TechCrunch in an interview..
“What we are talking here is like Bangladesh, Egypt, Nigeria, Pakistan, Philippines, Mexico, that’s our game, it’s this kind of where the company is. basically less than $5 per capita, and that’s what brought a lot of interest to this next group of big markets.”
Hruby said that Tofino Capital Focus in startups in the B2B segments, particularly those with fintech, logistics and markets issues.
The founding partners have some history together, having worked for 15 years with various US companies and family offices involved in investing in frontier markets, such as the Whitaker Group and the Atlantic Council.
In 2018, Pence and Hruby ventured into public relations when they founded InsiderPR, a firm that Hruby says works with “invisible entrepreneurs who rarely appear in global media.” InsiderPR is one of the best known PR firms in African tech and has worked for over 100 startups including SWVL, Flutterwave and Foodology.
But his work in Africa tech goes beyond co-founding a public relations firm. Hruby, for example, co-wrote a book with former TechCrunch contributor Jake Bright in 2015 about the continent’s potential to become a world power. She even worked as an advisor to AOL’s Steve Case on investing in African startups at one point.
The culmination of these experiences and be involved in technology in emerging markets early enough gave partners all the power and access to become angel investors in the future.
“We have been exposed and something like in the forefront of technology in Africa to various years and we have made some angel investments. And that angel investment has they come as a result of InsiderPR, which gave startups access to opportunities at a very early stage,” Hruby said..
They made their first angel investment in Seamless HR in 2018 and have backed 11 more projects since then, including Sabi, Mecho Autotech and Eksab. at the end of 2021, they began to toy with the idea of creating a venture fund. Tofino Capital, the result, takes things up a notch for partners as they become institutional equity participants for the first time. They still have to write checks on this fund.
Pence said Tofino Capital plans to invest between $50,000 and $500,000 in early-stage companies, primarily in pre-seed and seed stages.. And unlike the traditional thesis in which venture capital firms bet on a startup in their portfolio to return the fund, Tofino Capital plans to take a different approach, where it “gets in early and gets out.” fairly early too.
“We think Africa’s next phase of growth will not be the $1-42 billion Flutterwave and Andela type. These $200-$500 million profile mid-market companies will be growing,” Pence noted.
However, this not all. For a company focused on a very early stage, Pence mentioned that Tofino Capital is also interested in “particularly late” startups, in other words, the pre-IPO types.
It’s a pretty bold strategy, and according to Pence, investing at both ends of the spectrum is the best risk-hedged approach to investing in emerging markets. But as a small fund with check sizes under $1 million, how does the company intend to convince Series C and below companies to part with some capital?? Some leverage of external funds.
“So it’s super unique; it’s what we call the weights strategy here. Good probably do about 30 to 40 pre-seed and seed deals, and then less than five late-stage investments,” said founding partner.
“Now, going into those late-stage rounds with a smaller check size is going to be tough, but We think we are going to be able to do it because we bring differentiated capital. It is not single about the dollars; our backgrounds are in government relations, public relations and entering new markets. So that’s the play. We’ve developed some of those relationships with late-stage companies and we hope it works..”
The fund’s limited partners include US and European family offices, WS Investment Company, the Wilson Sonsini Goodrich & Rosati law firm mutual fund, and executives from a cross-section of US startups.
As market opportunities in Africa and surrounding frontier markets continue to open up, small to mid-sized funds with $10 million to $50 million of capital to deploy will grow in number as investors hope to soon support the next set of companies. of billions of dollars. Africa-focused firms that have launched such funds over the past year include Uncovered Fund, LoftyInc Capital, Savannah Fund and Ventures Platform.