Granite principal plans Africa fund

Yemi Lalude, a principal at Granite Global Ventures, plans to leave the firm to raise a $75 million venture fund focused on development opportunities in Africa, PE Week has learned.

The fund will focus on Nigeria and South Africa, two of Africa’s fastest growing economies. Lalude expects to work with a wide variety of high-growth businesses that already have product and revenue. The fund will not focus on technology.

The managing directors of Granite Global Ventures have been supportive of Lalude’s move and have promised to personally invest in his fund, according to sources. Lalude would not say what kinds of LPs he expects to target to raise the fund or when he fund-raising will begin.

Few venture funds have taken advantage of the opportunities in Africa. Venture firms have invested $900 million in 247 companies in Africa over the last five years, according to Thomson Financial (publisher of PE Week).

Even firms that are expanding across worldwide are not hurrying to get to the continent. “Africa is something we’re going to pay attention to,” says Draper Fisher Jurvetson Managing Director Don Wood. “South Africa might make the most sense. Tim Draper went there several years ago and was very impressed. He even bought some land there.” Still, DFJ has no plans to open an affiliate anywhere in Africa.

However, earlier this month, Emerging Markets Partnership of Washington, D.C., closed its second Africa fund with more than $520 million in capital. Fund I raised $350 million in 2002. The firm, which also invests in Korea and Argentina, seeks minority or majority positions in companies throughout Africa, with a focus on Nigeria, South Africa, Egypt and Kenya.

Overall, VCs that go to Africa are split into two camps. Some invest in emerging wireless communications infrastructure projects, such as the $87.4 million Nigerian telecom company Starcomms raised in two rounds from Actis Capital and the Emerging Markets Partnership. Others invest on a much smaller scale. Consider Venture Partners Botswana, which invests $36.7 million on behalf of the government run Citizen Entrepreneurial Development Agency Venture Capital Fund. The firm invests an average of $1 million in each of its startups. It invested $710,000 in Builders Merchants Botswana, the Home Depot of that country, in 2005, for example.

“People think writing a $100,000 check in Africa will do, but not in Nigeria. It’s not microfinance,” Lalude says. He says his new fund will expect to invest an average of $3 million to $4 million in each of its companies.