rali_cap gets backing from global VCs, launches $30M fintech fund for emerging markets – TechCrunch

Rali_capan early-stage venture capital firm focused on emerging markets fintech, launched a $30 million fund. Last month the solidify, Previously known as Rally Cap Ventures, reached its first close of $20 million (its original target) before increasing the size of the fund, signaling a strong appetite for LPs.

The two-year venture capital fund invests in B2B and API-first fintechs in Africa, Latin America and South Asia in the pre-seed and seed stages. It expects to achieve a second close by the end of June.

Rali_cap was first a collective before a fund, Hayden Simmonsthe general partner who launched the company in 2020, told TechCrunch in an interview.

As a hands-on person – he has a decade of experience working for emerging market fintechs such as Migo, Novi and Juvo in business development and partnership roles – Simmons said he sees a prospect in the aggregation of a community of “experts” (principally operators and angels) to collaborate via Slack on deal sourcing, due diligence and founder support and investing in emerging market fintechs.

“In this way, we believed we could outperform traditional venture capital models in bring value to founders and get more people involved in the venture capital game,” Simmons told TechCrunch on a call.

Two years later, this collective has almost 240 individual LPs. They include executives and managers from fintechs such as Wave, Block, MercadoPago, Rappi, Flutterwave, Yoco, Visa, Plaid, Stripe and Coinbase – and e-commerce platforms like Jumia and Shopify. About 40% are based in the United States, while the rest are spread across Africa, Latin America and Southeast Asia, markets where they deployed more than $6 million last year.

But at some point, most collectives with this or a similar strategy try to launch and manage funds (Future Africa and AngelList are a few examples), which rali_cap found itself doing quite early on.

“At the end of 2020, we recognized this was too passive a strategy,” Simmons remarked. “We had this super engaged community of all these fintech angels, but we decided it made more sense to have our capital, as well as being able to fund the deals we were seeing as well.”

We’ve also seen this play out with angel investors who have become top solo venture capitalists like Olumide Soyombo of Voltron Capital — and globally, Elad Gil and Lachy Groom.

Last year, rali_cap raised $2 million, which it has since deployed. And as a fintech-focused company, it made sure that sponsors for this new $30 million fund came from companies with a fintech affinity.. They include Breyer Capital, Propel VC, Better Tomorrow Ventures, FT Partners, Bain Capital, Lateral Capital, a few family offices, HNI and a multi-billion dollar crossover fund also known to invest in smaller funds.

Rali_cap has supported 12 African startups, 13 Latin American startups and 7 Asian startups. They range from banking-as-a-service and card-issuing players to open finance and SME digitization platforms, including Belvo, Mono, Minka, Stitch, Union54, Pomelo, Simetrik, Brick and Abhi. Meanwhile, some of rali_cap’s LPs have participated in start-up and growth follow-up rounds of these startups.

“Our whole thesis is that the unit economics of investing in early-stage B2C fintech in these markets doesn’t yet make sense,” Simmons said, explaining why rali_cap only invests in B2B fintech platforms.

“It is therefore still too difficult to create B2C products from many markets in Africa that target a large enough Total Addressable Market (TAM) due to the fragmented nature of the continent. The focus on APIs allows for more efficient expansion within a market as they can expand the TAM, help B2C fintechs subscribe to people at the last mile, assemble many markets and enable cross-regional expansion,” he added.

Rali_cap is particularly interested in startups in the major markets of these regions – Nigeria, Egypt and South Africa in Africa; Brazil and Mexico in Latin America; and Pakistan and Bangladesh in South Asia. “But we’re always open to exceptions,” Simmons said.

According to partner Kyane Kassiri, rali_cap invests between $200,000 and $500,000. He said the company tends to conduct pre-seed deals and participate in seed towers. Kassiri, who had a brief stint at Berlin-based venture capital firm Target Global before joining rali_cap earlier this year, had worked closely with Simmons during the duo’s time at Lateral Capital.

With experience at both ends of the spectrum – being an angel investor with Suya Ventures to Target Global, which has more than $3 billion in assets under management – ​​Kassiri believes the founders are looking for two particular groups of investors on their table. capitalization. The first is the multi-billion dollar AUM type of venture capital, which can double at every turn and push you towards the IPO. And second, operator-investors who bring domain expertise and a vast network of talent and resources – which is what rali_cap is all about.

“Our goal is to help founders by opening LP stamps and an entire community of our LPs to provide value and not necessarily take active positions on the board of directors,” he said. “We are here as a catalyst to help them go from zero to one. It’s a way of positioning ourselves.

Rali_cap rotates his collective arm on Sydecar. It is a trade execution software for venture capitalists which raised $8.3 million from rali_cap and other backers last month. Platform CEO Nick Talreja also wears another hat as legal counsel to rali_cap. Other strategic advisors to the fund include Adia Sowho, CMO of MTN Nigeria; Rob Eloff, General Partner of Lateral Capital; and Sheel Mohnot, the general partner of Better Tomorrow Ventures.

“I have been really amazed to see rali_cap evolve into the strong brand it has become, rooted in its community of the world’s top fintech operators,” said Mohnot, whose company backs rali_cap as an LP. “Their coverage of pan-emerging markets gives them a holistic perspective on industry trends.

Rali_cap’s new fund coincides with the introduction of similar funds launched by companies like Capital Tofino to attract early-stage founders in emerging markets. But from a purely fintech-focused lens, rali_cap somehow stands out. Last year, fintech accounted for the largest venture capital funding in these markets (approximately 60% in Africa, 39% in Latin America and 25% in Southeast Asia.)

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