Goodwell Investments, a Dutch foundation, and Oxfam Novib, an Oxfam International affiliate have launched Pepea, a €20 million ($21.7 million) fund to support early-stage startups in Kenya, Uganda, and Ethiopia.
The fund, which is supported by Oxfam Novib Impact Investments, will offer venture debt with a concentration on mezzanine finance, which is debt that can be converted into equity.
The fund targets early-stage startups operating for one to five years who are taking money but haven’t secured funding.
Goodwell Investments, which will manage the fund’s operations and assist in the development of its portfolio, stated that part of the assistance to startups will include guaranteeing that they have the right structures and systems in place to assist them to prepare and increase their first rounds.
The fund will invest in businesses that produce basic goods and services that account for a large portion of household spending in low-income communities, such as sustainable agriculture, energy, clean mobility, logistics, and waste management. Pepea’s long-term goal is to improve the affordability and quality of these necessities.
Els Boerhof, the managing partner at Goodwell Investments, stated that the fund aims for high-impact tech-enabled businesses “because the integration of tech and brick-and-mortar works best in these environments.”
Tech allows access and affordability, which are critical for the end-users we want to reach, the continent’s lower-income groups.
The fund will invest in startups in Kenya, Uganda, and Ethiopia, where Oxfam and Goodwell already have a presence. Oxfam runs an SME incubation program in all three markets, and Goodwell’s funds are active in both Uganda and Kenya.
Pepea, the impact investor and non-governmental organization’s first fund will offer an initial check of $100,000 to $500,000, with follow-on investments of up to $1 million from Goodwell’s funds.
Goodwell raised its first fund in 2007 and has since invested in over 20 companies, including Paga, MFS Africa, Sendy, Max.ng, and Good Nature Agro.
The investment company led a $50 million Series C round for Copia Global in 2022 an e-commerce platform, even though its major investment has been in mobility, agriculture and finance.
The impact investor introduced its second fund, the $154 million UMunthu II, last year and currently manages over € 310 million.
In 1996, Oxfam Novib launched its first investment fund through its Impact SME Development
It intends to expand on this with the Pepea fund, which aims to assist businesses in maximizing their positive impact in the communities they serve.
Tamara Campero, investment manager at Oxfam Novib, stated that Oxfam Novib has played an important role in developing the microfinance sector as a means of providing access to financial services where they are most needed. As that sector has matured beyond the realm of NGOs, the firm is ready to shift its focus to a less-served market segment.
Campero also stated that the firm recognizes the difficulties that SMEs in the region (particularly those owned by women) face in accessing fine-tuned patient capital, and that they now want to play a role in addressing those needs.
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