The drive for social good

A new generation of social enterprises is emerging in Africa. A generation that is fueled by talented entrepreneurs who are driven by the ambition to provide basic goods and services at affordable costs, from education and healthcare to energy and financial services. Their target group:  people who earn two dollars a day or less, the so-called ‘Base of the Pyramid’ – a true mass market. Novastar Ventures East Africa Fund (Novastar) is the first venture capital fund at scale to deploy capital into early stage small and medium-sized enterprises (SME) that design and execute game-changing business models for this new generation target group. Hivos-Triodos Fund is among the investors in Novastar and solidifies with this investment its SME strategy in emerging markets.

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Sanergy focuses on providing hygenic and accessible sanitation

Accessible, affordable and sustainable solutions

A number of key macro-economic, demographic, and structural factors are coming together to make venture capital a viable strategy for East Africa, such as sustained strong economic growth, a youthful population, rapid urbanisation, improved business regulations, and globalisation of technologies and methodologies.

In this dynamic landscape, Novastar focuses on scaling sustainable and innovative SMEs that offer market driven solutions to poverty. A striking example in Novastar’s portfolio is Sanergy in Kenya. This company makes hygienic sanitation accessible, affordable and sustainable in urban slums. It builds a network of high-quality toilets and franchises them to local micro-entrepreneurs who now provide sanitation for over 20,000 slum dwellers a day. Sanergy employees collect more than 7.5 metric tonnes of waste from the toilets daily and deliver it to a central processing facility where the waste is converted into organic fertilizer for farmers. Finance from Novastar enables Sanergy to develop and demonstrate traction in the market for their organic fertilizer. Novastar also focuses on education by financing Bridge International Academies, which provides over 100,000 pupils from low-income families with affordable, high-quality primary education, and on environmental enterprises like SolarNow, that addresses the pressing demand for affordable energy by providing solar home systems for households and entrepreneurs primarily in rural Uganda.

A viable strategy

Casper Sprokel, Head of the Equity Team Emerging Markets: ‘These are all companies that address a mass market need. Their challenge and ambition is to come up with a business model that make these products and services accessible, affordable, and easy to scale up. The thesis is that this can be done by realising both a social and financial return.’ The investment in Novastar fits Hivos-Triodos Fund’s goal to catalyse growth in selected high impact sectors, and boost SMEs in emerging markets.

The children at Bridge International Academies
The children at Bridge International Academies
Novastar intends to play a catalysing role in the African financial landscape, intending to create viable investment opportunities for new sources of capital.
Casper Sprokel

Novastar is the first venture fund at scale, able to invest as little as USD 100,000 or as much (cumulatively) as USD 6 million. Only four of 128 self-identified impact investment funds invest at venture stage in Africa, and none is singularly focused on impact venture capital in East Africa.

Casper Sprokel: ‘Thus Novastar intends to play a catalysing role in the African financial landscape, intending to create viable investment opportunities for new sources of capital that would not otherwise be available in East Africa.’

For an overview of our later-stage funds in emerging markets, please visit the Emerging Markets investment page.