Cape Town-headquartered venture capital firm HAVAÍC has announced the third close of its US$50 million African Innovation Fund 3, securing more than US$30 million in commitments following a strategic investment from E Squared Investments, the impact investing arm established by the late Allan Gray in 2007. This milestone represents a significant vote of confidence in African technology innovation at a time when the continent’s venture capital ecosystem is navigating a complex recovery from two years of declining investment activity.
E Squared Investments joins an impressive roster of cornerstone investors including Fireball Capital, Universum Wealth, the SA SME Fund, and Sanlam Multi-Manager, whose 2024 investment ahead of Fund 3’s second close in July 2025 marked the financial services group’s first allocation to South Africa’s venture capital industry. The collective backing from these institutional and impact investors signals growing recognition that African technology startups represent compelling opportunities for those willing to take a longer-term perspective on value creation and social impact.
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Strategic Partnership With Impact-Focused E Squared Investments
E Squared Investments, which holds approximately 17.8% of Allan Gray Proprietary Limited, was founded with a distinct mission to channel catalytic capital in support of responsible entrepreneurship and inclusive economic growth in South Africa. The organization emerged from the philanthropic vision of the late Allan Gray, founder of Africa’s largest privately owned investment management company, who recognized his responsibility to society and established E Squared as a mechanism to transform financial returns into sustainable employment opportunities and economic inclusion.
“HAVAÍC’s track record of backing African innovation that translates into sustainable, real-world outcomes strongly reflects our investment philosophy,” says Pyi Maung, Chief Investment Officer at E Squared. “Their combination of capital and strategic support enables Africa-born startups to scale responsibly and access global markets, which aligns closely with E Squared’s focus on long-term value creation. We look forward to being a part of their continued impact through our investment in Fund 3.”
The partnership brings together complementary strengths: HAVAÍC’s proven ability to identify and support high-potential technology ventures across the continent, and E Squared’s patient capital approach backed by dividends from Allan Gray’s investment operations. Unlike traditional venture capital firms answering to external limited partners demanding quick returns, E Squared operates with a longer investment horizon that permits the patient development of businesses addressing systemic challenges in African markets.
In 2023 alone, E Squared deployed R99.6 million across 106 businesses, demonstrating its commitment to deploying capital at scale across South Africa’s entrepreneurial ecosystem. The organization has created more than 20,865 jobs cumulatively and recovered R66.5 million of the R661 million invested since beginning funding activity in 2016, validating its model of marrying investor returns with social good.
Fund 3 Deployment Strategy and Portfolio Composition
Launched in March 2023, the US$50 million African Innovation Fund 3 is on track to complete up to 15 investments in early-stage, high-growth, post-revenue African startups with regional and global growth potential. To date, Fund 3 has deployed US$10 million across eight companies, maintaining a disciplined approach to capital allocation that emphasizes quality over quantity in an environment where many venture firms have pulled back from active deployment.
Recent investments showcase the fund’s sectoral diversity and strategic focus on businesses addressing critical infrastructure gaps across African markets. Portfolio additions include SAPay, the Johannesburg-based fintech that is digitizing minibus taxi fares in South Africa’s massive informal transportation sector, and Stellenbosch-born fraud-prevention fintech Entersekt, which provides authentication solutions for financial institutions globally.
Follow-on investments demonstrate HAVAÍC’s commitment to supporting portfolio companies through multiple funding rounds as they scale operations and expand market reach. The firm doubled down on Sportable, a sports data and analytics platform that develops real-time tracking technologies for professional athletics, and Talk360, an international calling application that provides affordable voice communication services connecting emerging markets to global destinations.
Earlier Fund 3 investments brought Pan-African payments platform NjiaPay and fast-growing livestock trading platform SwiftVEE into HAVAÍC’s now 23-strong portfolio of African technology startups, which collectively serve over 22 million users across 183 countries. This geographic reach underscores the global ambitions of African-born technology ventures and their capacity to compete in international markets when provided with appropriate capital and strategic support.
Landmark Exits Validating African Venture Capital Investment Thesis
The announcement of Fund 3’s third close follows HAVAÍC’s strongest year to date, underpinned by two transformational exits that rank among the most significant technology transactions in African history and validate the firm’s investment thesis that African technology startups can deliver substantial returns to patient capital providers.
In February 2025, emergency response technology company RapidDeploy was acquired by Motorola Solutions, the US-listed telecommunications giant. The transaction, whose financial terms were not disclosed, represented a landmark exit for South African technology entrepreneurship and demonstrated that African-born software companies can develop products compelling enough to attract acquisition interest from Fortune 500 corporations.
RapidDeploy’s cloud-native Next Generation 911 platform, which accelerates emergency response through advanced call location mapping and analytics, has been deployed across multiple states in the United States including Florida, Indiana, Illinois, Colorado, and Ohio. The company’s ability to secure public safety contracts in one of the world’s most demanding markets validates the technical excellence and operational capabilities that African technology ventures can achieve when properly capitalized.
Shortly after the RapidDeploy exit, the hearX Group completed its merger with Eargo in March 2025 to form LXE Hearing, raising US$100 million in fresh capital from Patient Square Capital. The transaction created the first notable combination for the over-the-counter hearing aid market since the FDA established this regulatory category in 2022, positioning the merged entity to serve an estimated 44 million American adults experiencing hearing loss.
The hearX Group, which originated from the University of Pretoria and began trading in 2016, developed a suite of digital, clinically-validated mobile technologies for hearing loss detection and diagnosis. The merger with Eargo combines hearX’s Bose-powered Lexie Hearing aids and award-winning mobile applications with Eargo’s “virtually invisible” direct-to-consumer hearing devices, creating a comprehensive hearing health platform with both brands maintained under unified corporate ownership.
These exits demonstrate that African technology ventures can achieve the scale, product-market fit, and operational excellence required to deliver significant value to investors while simultaneously creating employment, building institutional capabilities, and establishing African technology companies as credible participants in global markets.
African Venture Capital Context: Recovery Amid Structural Transformation
HAVAÍC’s fundraising success arrives against a backdrop of profound transformation in African venture capital markets. According to the African Private Capital Association’s 2024 report, the continent’s venture ecosystem experienced a 22% decline in deal value and a 28% drop in deal volume during 2024, representing the sharpest contraction among global regions and continuing a downward trajectory that began in the third quarter of 2022.
Total venture capital funding in Africa reached just $2.2 billion in 2024, marking a 25% decrease from 2023 and a staggering 53% decline from the 2022 peak of $4.6 billion. The number of active venture capital investors participating in African deals dropped from more than 1,000 in 2022 to approximately 614 in 2024, while only 188 startups successfully raised capital compared to 353 at the market peak.
However, early indicators suggest that 2025 may represent an inflection point for African venture activity. The continent recorded 122 deals in the second quarter of 2025, representing a 28% increase year-over-year, with deal flow demonstrating three consecutive quarters of steady improvement. First-half 2025 activity reached 239 deals, up 11% compared to the same period in 2024, suggesting that investor confidence is gradually returning to African technology markets.
The recovery remains highly selective, with capital concentrated in proven founders, established business models, and startups demonstrating clear paths to profitability rather than growth-at-all-costs strategies. Average deal sizes increased to US$7.7 million in early 2025, up 31% year-on-year, indicating that investors willing to deploy capital are writing larger checks to fewer recipients rather than spreading risk across numerous smaller bets.
Seed-stage activity has experienced particularly robust growth, with 107 seed deals recorded by the third quarter of 2025, nearly matching the total completed during all of 2024. This surge in early-stage investment provides a foundation for future pipeline development, though the scarcity of late-stage capital remains a significant constraint for startups seeking growth funding beyond Series B.
The Rise of Local African Investors and Alternative Financing
A particularly significant trend reshaping African venture capital is the emergence of local investors as the most active participant group. African investors represented 31% of all venture capital participants in 2024, marking a watershed moment in the ecosystem’s maturation and reducing dependence on foreign capital that can prove fickle during periods of global economic uncertainty.
This localization of capital sources carries important implications for African technology entrepreneurship. Local investors typically possess superior understanding of market dynamics, regulatory environments, and operational challenges specific to African markets. Their growing prominence suggests the development of indigenous expertise in technology investment and the accumulation of capital within the continent that can be recycled into successive generations of startups.
Simultaneously, venture debt has emerged as an increasingly important financing mechanism for African startups. An extraordinary US$1.6 billion in venture debt was deployed across 55 transactions during the first nine months of 2025, more than double the figure for all of 2024. This dramatic expansion reflects growing comfort among lenders with Africa’s high-growth companies and provides entrepreneurs with alternatives to dilutive equity financing that allow them to extend runways and finance working capital needs without surrendering additional ownership.
The combination of increased local investor participation and expanding venture debt availability suggests that African technology entrepreneurship is developing a more diversified and resilient capital infrastructure that can sustain innovation through economic cycles rather than depending exclusively on foreign venture capital that tends to retreat during downturns.
Sectoral Evolution Beyond Fintech Dominance
While financial technology continues to dominate African venture investment—accounting for 46% of 2024 deals according to industry analyses—the ecosystem is experiencing meaningful diversification into adjacent sectors addressing fundamental infrastructure challenges across the continent.
Clean and climate technology more than doubled its share of tech-enabled deal volume to 13% in 2024, reflecting growing recognition that Africa’s energy transition represents both an enormous challenge and a substantial commercial opportunity. Kenya led the continent in total funding with US$537 million in 2024, benefiting substantially from climate-focused debt capital deployed into renewable energy infrastructure.
Artificial intelligence emerged as a funded vertical for the first time, securing 42 deals collectively valued at US$108 million during 2024. This nascent sector development suggests that African entrepreneurs are beginning to leverage advanced technologies to address local challenges in agriculture, healthcare, education, and commerce, though AI investment remains far below levels seen in developed markets relative to economic scale.
Healthcare technology, logistics, and agritech platforms continue attracting investment as entrepreneurs build digital solutions addressing inefficiencies in traditional value chains. These sectors collectively represented meaningful portions of 2024-2025 venture deployment and offer substantial opportunities for value creation given the massive gaps between current service delivery and population needs across African markets.
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Geographic Concentration and Emerging Market Dynamics
The concentration of venture capital in Africa’s “Big Four” markets—Nigeria, Kenya, South Africa, and Egypt—remains pronounced, with these countries capturing 84% of 2024 funding. This geographic concentration reflects the combination of larger market sizes, more developed technology ecosystems, superior regulatory environments for technology businesses, and established relationships between local entrepreneurs and international venture capital firms.
However, emerging markets including Togo, Rwanda, Ghana, and Senegal are gradually attracting investor attention as entrepreneurs in these countries demonstrate ability to build viable businesses addressing local market opportunities. North Africa particularly experienced resurgence in 2025, accounting for 26% of all deals and US$248 million raised, marking the region’s strongest performance in five years and suggesting that geographic diversification may accelerate as investors seek opportunities beyond saturated markets.
Francophone Africa presents particularly interesting dynamics. While Francophone countries represented 55% of funding in the “Rest of Africa” category (excluding the Big Four) during 2024, this marked a significant decline from 68% in 2023, as equity funding in these markets dropped 31% year-over-year to US$229 million. This contraction suggests that investors are becoming more selective about which Francophone markets merit deployment, favoring those with superior infrastructure, regulatory clarity, and market accessibility.
HAVAÍC’s Strategic Position and Investment Philosophy
Ian Lessem, Managing Partner at HAVAÍC, articulated the firm’s strategic vision in commenting on the Fund 3 third close: “We look forward to accelerating our portfolio’s impact with the support of E Squared’s investment and doubling down on our strategy to grow local innovation by unlocking international markets. As evidenced by our portfolio companies’ growth and enduring positive returns, the African VC industry has the talent, technology, and opportunities to catalyze sustainable job creation and social empowerment on the continent. This is where investors with a strong appetite for creating impact should be deploying their capital.”
This statement captures HAVAÍC’s distinctive positioning within African venture capital: a firm that explicitly embraces both commercial returns and social impact as complementary rather than competing objectives. The strategy of helping African-born startups access international markets while maintaining local roots addresses a persistent challenge in African technology entrepreneurship—the tension between serving massive but lower-purchasing-power local markets and pursuing higher-value international opportunities.
HAVAÍC’s portfolio companies have achieved notable recognition beyond their commercial success. RapidDeploy, hearX Group, FairMoney, and AURA have ranked among Fast Company’s Most Innovative Companies and the Financial Times’ fastest-growing companies in Africa, demonstrating that African technology ventures can compete for talent, customers, and recognition on global stages when properly supported.
The firm’s investment strategy focuses on post-revenue companies that have validated product-market fit and demonstrate readiness for scaling operations with additional capital. This approach reduces technology risk and market risk while accepting execution risk—a portfolio construction philosophy that has proven effective in generating both competitive returns and meaningful social impact through employment creation and capability building.
Path to Final Close and Future Deployment Strategy
The African Innovation Fund 3 is on track to achieve its US$50 million target at its fourth and final close scheduled for August 2026. The remaining US$20 million in capital commitments will provide resources to complete the fund’s target of 15 investments while maintaining reserves for follow-on investments in existing portfolio companies that demonstrate strong performance and readiness for additional capital to accelerate growth.
With US$10 million already deployed across eight companies, Fund 3 has capital available for seven additional platform investments plus follow-on rounds. This pipeline capacity positions HAVAÍC to be selectively active throughout 2026 as the African venture market continues its gradual recovery and high-quality investment opportunities emerge from the ecosystem.
The fund’s timeline extends through the 2026-2029 period for active deployment and initial value creation, followed by potential exit activity in the 2029-2033 timeframe as portfolio companies mature and liquidity opportunities develop. This extended horizon reflects the patient capital approach required for African venture investing, where building transformational businesses typically requires longer development periods than comparable ventures in developed markets given infrastructure constraints and smaller addressable markets.
Institutional Confidence in African Technology Innovation
The roster of institutional investors backing African Innovation Fund 3 represents a cross-section of South African capital committed to supporting technology entrepreneurship and economic transformation. Sanlam Multi-Manager’s participation—its first allocation to South Africa’s venture capital industry—signals that major financial services organizations are beginning to view African VC as a legitimate asset class worthy of institutional allocation rather than experimental exposure.
The SA SME Fund’s continued participation aligns with its legislative mandate to channel capital into South Africa’s venture capital industry, supporting the broader development of the continent’s entrepreneurial ecosystem through both direct fund investments and ecosystem-building initiatives. Its backing across multiple HAVAÍC funds demonstrates satisfaction with the firm’s investment performance and fund management capabilities.
Fireball Capital and Universum Wealth’s repeated commitments across HAVAÍC’s three funds reflect long-term conviction in the firm’s strategy and execution. These investors have witnessed the firm’s evolution from its initial US$6 million Fund 1 launched in 2016, through its US$20 million Fund 2 in 2020, to the current US$50 million Fund 3, representing steady growth in scale and institutional sophistication.
Broader Implications for African Venture Capital Development
HAVAÍC’s successful fundraising and demonstrated ability to generate exits carries implications beyond the firm’s specific portfolio. The company’s trajectory provides evidence that disciplined African venture capital firms can raise successive funds of increasing size, deploy capital effectively into high-potential startups, and generate liquidity events that validate investment theses and return capital to investors.
This track record matters enormously for African venture capital’s long-term development. The asset class requires proof points demonstrating that patient capital deployed into African technology ventures can generate competitive risk-adjusted returns, not merely social impact. Without such demonstrations, institutional capital allocation to African VC will remain constrained regardless of the continent’s growth potential or demographic trends.
The firm’s exits to strategic acquirers like Motorola Solutions and through value-creating mergers like hearX-Eargo establish valuable precedents. These transactions demonstrate that African technology companies can build intellectual property, operational capabilities, and market positions attractive to international corporations and financial investors, creating pathways to liquidity beyond the limited public market exits available in African capital markets.
Challenges Persisting in African Technology Entrepreneurship
Despite encouraging developments, significant structural challenges continue constraining African technology entrepreneurship and venture capital development. Female-led startups raised just 2% of African venture funding in 2024—dropping below 1% when grant funding is excluded—underscoring persistent gender gaps in entrepreneurial ecosystems and investor networks across the continent.
The scarcity of late-stage capital remains a binding constraint for African startups seeking to scale operations beyond initial market validation. Only one Series C round was recorded in the second quarter of 2025—a US$13 million investment in Egypt’s MoneyFellows—highlighting the absence of growth capital for companies requiring substantial resources to expand across multiple African markets or penetrate international territories.
Exit opportunities remain limited compared to developed markets, with trade sales dominating the 138 venture-backed exits recorded between 2019 and 2024. The average holding period of 3.8 years for exits suggests relatively quick liquidity events, but the concentration of exits in strategic sales rather than secondary transactions or public market listings limits the diversity of exit pathways available to venture investors.
Regulatory environments vary dramatically across African jurisdictions, creating challenges for startups seeking to operate pan-African strategies. Compliance requirements, licensing frameworks, foreign exchange controls, and digital service regulations differ substantially between countries, forcing entrepreneurs to navigate complex legal landscapes that increase operational costs and extend time-to-market for regional expansion.
Outlook for African Venture Capital in 2026 and Beyond
As African venture capital markets enter 2026, the ecosystem appears to be stabilizing after two challenging years of adjustment following the 2022 peak. While total funding levels remain well below the heights reached during 2021-2022, the quality of investment activity and the emergence of successful exits suggest the development of a more sustainable venture capital industry built on realistic valuations and sound business fundamentals rather than speculative growth expectations.
The projected economic growth for Africa—with the African Development Bank forecasting real GDP growth averaging 3.8-4.2% during 2024-2025, favorable compared to global averages of 2.9-3.2%—provides a supportive macroeconomic backdrop for technology entrepreneurship. If this growth translates into expanding middle classes, increased digital adoption, and improving infrastructure, it could create substantial opportunities for technology-enabled businesses addressing consumer and enterprise markets.
The combination of returning investor confidence, increasing local capital participation, expanding venture debt availability, and improving ecosystem infrastructure suggests that African venture capital may be entering a more mature phase characterized by selective deployment into high-quality opportunities rather than indiscriminate capital allocation driven by fear of missing out on market growth.
For HAVAÍC specifically, the path forward involves completing Fund 3 deployment through 2026-2027, supporting portfolio companies toward exit events in the 2028-2030 timeframe, and potentially raising a fourth fund if market conditions support continued institutional investor appetite for African venture capital exposure. The firm’s demonstrated ability to generate exits and attract institutional capital positions it well for continued leadership in South African and broader African technology investing.
Conclusion
HAVAÍC’s third close of African Innovation Fund 3, securing over US$30 million in commitments and adding E Squared Investments as a strategic partner, represents more than a single firm’s fundraising milestone. The transaction validates the broader proposition that disciplined venture capital firms can successfully invest in African technology startups, generate competitive returns, create meaningful social impact, and attract institutional capital for successive funds of increasing scale.
The firm’s recent exits through RapidDeploy’s acquisition by Motorola Solutions and hearX Group’s merger with Eargo to form LXE Hearing demonstrate that African technology ventures can achieve the operational excellence, market positions, and intellectual property development required to attract strategic acquirers and execute transformational transactions. These liquidity events provide proof points essential for continued institutional capital allocation to African venture capital.
As African venture markets navigate recovery from the 2023-2024 downturn, firms like HAVAÍC that maintained disciplined investment approaches, supported portfolio companies through challenging periods, and delivered exits validating their investment theses are well-positioned to continue playing leadership roles in the ecosystem’s development. The participation of impact-focused investors like E Squared Investments alongside commercial institutional backers suggests growing recognition that African technology entrepreneurship can deliver both competitive financial returns and meaningful contributions to employment creation, capability building, and economic transformation across the continent.
The path forward requires patience, selectivity, and continued commitment from entrepreneurs, investors, and policymakers alike. But the accumulating evidence from firms like HAVAÍC suggests that African venture capital is maturing into a sustainable asset class capable of channeling capital into innovative businesses addressing the continent’s most pressing challenges while generating returns that justify continued institutional participation in the ecosystem.
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By: Montel Kamau
Serrari Financial Analyst
17th February, 2026
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