Tofino Capital, a venture capital firm targeting early stage startups in emerging markets, has launched its $10 million fund. It announces the initial close of this fund at $5 million and hopes to reach a final close in nine months.
The firm, Founded by Eliot Pence and Aubrey Hruby, want back startups in Africa, Asia, Latin America and the Middle East†
“The fund’s key proposition is to target large markets with hundreds of millions of people who have minimal access to venture capital† So that doesn’t apply to China, India, Brazil, those kinds of big markets with a lot of venture capital,” general partner Pence said in an interview with †
“What were what we’re talking about here is like Bangladesh, Egypt, Nigeria, Pakistan, Philippines, Mexico, that’s our game – it’s this kind of business actually less than $5 per capita, which is what has sparked a lot of interest in this next group of big markets. †
Hruby said Tofino Capital focuses on startups in the B2B segments, especially those with fintech, logistics and market themes.
The founding partners have a history together, having spent 15 years working with various US companies and family offices involved in frontier market investments, such as the Whitaker Group and the Atlantic Council.
In 2018, Pence and Hruby ventured into public relations when they founded InsiderPR, a company that Hruby says works with “invisible entrepreneurs who are rarely covered in the global media.” InsiderPR is one of the well-known PR agencies in African technology and has worked for more than 100 startups including SWVL, Flutterwave and Foodology†
But their work in Africa’s technology goes beyond co-founding a PR agency. Hruby, for example, co-wrote a book in 2015 with former contributor Jake Bright about the continent’s potential to become a global powerhouse. She even once worked in an advisory role for AOL’s Steve Case on investments in African startups.
The culmination of these experiences and involved in emerging markets tech early enough gave the partners all the firepower and access to become angel investors later on.
“We have” been exposed and a bit on the frontline of Africa tech for multiple years and we did some angel investing† And that angel investing has come as a result of InsiderPR, giving startups access to opportunities at a very early stage,” said Hruby†
They made their first investment in seamless HR in 2018 and have since supported 11 other efforts, including Sabi, Mecho Autotech and Eksab. too late In 2021, they started fiddling with the idea of creating a venture fund. Tofino Capital, the result, kicks things up a notch for the partners as they become institutional equity capital for the first time. They have yet to write checks from this fund.
Pence said Tofino Capital plans to invest between $50,000 and $500,000 in start-up companies, primarily in pre-seed and seed stages† And contrary to the traditional premise that VC firms bank on one startup in their portfolio to return the fund, Tofino Capital plans to take a different approach, where it “gets in and out early.” honestly asked too.”
†We think Africa’s next growth phase will not be the $1-42 billion Flutterwave and Andela types. It will grow these mid-sized companies with $200-$500 million profiles,” Pence noted.
That’s not all, however. For a very early stage company, Pence said Tofino Capital is also interested in “particularly late” startups, in other words, the pre-IPO types.
It’s quite a 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 how does the company as a small fund with checks under $1 million sweetly talk about Series C and later companies to part with some equity?† Some use external financing.
“So it’s super unique; it’s what we call the barbells strategy here. Good probably do about 30 to 40 pre-seed and seed deals, and then less than five late-stage investments,” said the founding partner†
“It will be hard to get into those late stage rounds with a smaller check, but we think we’re going to be able to do that because we’re bringing differentiated capital. It’s not only about the dollars; our backgrounds are in government relations, PR and entering new markets† So that’s the play. We have developed some of those relationships with the late stage companies and we hope it comes true†
The fund’s limited partners include US and European family offices, WS Investment Company, the investment fund of law firm Wilson Sonsini Goodrich & Rosati, and executives from a cross-section of US startups.
As market opportunities in Africa and surrounding frontier markets continue to open up, small to medium-sized funds with $10 million to $50 million in capital to bet will grow in number as investors hope to support the next batch of multibillion-dollar companies early. Africa-focused companies that have launched such funds in the past year include Uncovered Fund, LoftyInc Capital, Savannah Fund and Ventures Platform.