Novastar Ventures closes $147M Africa fund with Japanese corporate investors as new LPs
What's the deal? Pan-African VC firm Novastar Ventures has closed its third fund, the Africa People and Planet Fund III (NVIII), at $147 million — a 40% increase on its previous fund, which closed at $108 million in 2020.
The fund fell short of its original $200 million target. Investors include a notable contingent of Japanese institutions — MitsubishiDealroom has a profile for this one. Try Dealroom →, Sumitomo Mitsui Banking CorporationDealroom has a profile for this one. Try Dealroom →, Toyota VenturesDealroom has a profile for this one. Try Dealroom →, SBI HoldingsDealroom has a profile for this one. Try Dealroom →, and the Japan International Cooperation AgencyDealroom has a profile for this one. Try Dealroom → — alongside European development finance institutions including British International Investment and NorfundDealroom has a profile for this one. Try Dealroom →.
Founded by Andrew CarruthersDealroom has a profile for this one. Try Dealroom → and co-managed with partner Brian OdhiamboDealroom has a profile for this one. Try Dealroom →, Novastar focuses on startups solving large-scale challenges in Africa with a climate and social lens.
The new fund invests at pre-Series A through Series B, with initial cheques ranging from $1 million to $8 million. It has already backed six companies, including food delivery platforms Chowdeck and Breadfast, electric mobility startups GreenwheelsDealroom has a profile for this one. Try Dealroom → and ARC RideDealroom has a profile for this one. Try Dealroom →, smartphone distributor MoPhonesDealroom has a profile for this one. Try Dealroom →, and agritech company Sistema.bio.
For the first time, the fund will invest across the entire continent — adding Egypt and South Africa to Novastar's established footprint in East and West Africa.
Why now? The Japanese investor base signals a structural change in how Japanese capital is approaching Africa. More than 60 Japanese investors backed over 190 deals on the continent in 2025, driven by a search for growth as their home market shrinks and interest rates remain low. Novastar built relationships with several of these institutions through co-investments before formalising the relationship in this fund, offering them co-investment rights alongside LP stakes.
The close also follows a subdued period for African VC — firms raised only $107 million in aggregate in 2025 — making NVIII one of the largest African VC closes of the year and a significant vote of confidence in the market.
What could go wrong? African VC has a history of fundraising shortfalls and slow deployment, and NVIII itself came in 26% below its target. Currency risk, regulatory complexity across multiple markets, and the long timelines required to build businesses in emerging economies all weigh on returns. Funds backed heavily by development finance institutions also tend to come with impact reporting requirements that can slow operations.
The signal: The Japan-Africa investment corridor is opening in a meaningful way, and Novastar is positioning itself as the bridge. More broadly, the fund reflects a maturing thesis: that climate-positive businesses in high-growth African markets are not a compromise between returns and impact, but increasingly the same bet.
As global capital looks for growth outside saturated Western markets, Africa's combination of young populations, rising urbanisation, and acute climate challenges is drawing in institutional capital that has historically looked elsewhere.
Sources:
Technext
Techpoint
Techcabal
Ecofin Agency
Business Times
Bloomberg
Novastar Ventures' LinkedIn post
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