Factor[e] Ventures, a team of venture builders that invests in early-stage companies in sub-Saharan Africa and Southeast Asia, has launched a new venture studio specifically for African startups. The new venture studio, Delta40, will invest $100,000 to $600,000 in African energy, agriculture, and mobility startups.
Delta40 secured early funding and strategic support from the Autodesk Foundation, the Global Energy Alliance for People and Planet (GEAPP), the IKEA Foundation, the Bezos Earth Fund, Wilson Sonisi, as well as government, private sector, and finance institutions. The venture studio will be based in Kenya, with operations in Nigeria.
In addition to providing capital, Delta40 will also act as a co-founder, offering product testing, technology brokering, and early-stage commercialisation, and working side-by-side to increase the speed of venture building. Venture studios are few and far between in Africa, compared to venture capital (VC) firms. Venture studios typically develop an idea, create a company around it, and then hand over the reins to a qualified CEO while remaining on as part of the board of directors.
Lyndsay Holley Handler, the co-founder and managing partner of Delta40, said that they took the venture studio route because of the speed at which it allows startups to grow. “After building Pan-African ventures for two decades, we are confident that the venture studio model can dramatically increase the speed and success of innovation from idea to scale to exit,” she said.
According to Partech’s 2022 Africa tech VC report, the energy, agriculture, and mobility sectors accounted for less than 8% of total funding on the continent last year. These sectors have typically been ignored by investors, and this is what Delta 40 wants to change by derisking the sectors for other investors.
The venture studio’s approach aims to reduce the effects of climate change in Africa. “Although only 3% of global carbon emissions come from Africa, more than 60% of African households will be affected by climate change if we do not act. A decade of investing in energy, agriculture, mobility, and water innovations in emerging markets has affirmed that there is a great opportunity at the formation stage to support local and diverse founders as they connect their technologies and markets,” said Morgan DeFoort, the managing principal at Factor[e] Ventures.
The venture studio has already started building six startups and is actively evaluating new ideas. “We are launching the Delta40 Venture Studio to connect African and female founders with the technology, talent, capital, and leadership support they need to build successful companies and thrive. “Together with our founders, we aim to build a portfolio of transformative ventures across this important continent that improve lives, amplifies the entrepreneurial ecosystem, and protects the planet for generations to come,” Handler concluded.