Japanese corporate giants Mitsubishi Corp., Toyota Ventures LLC, and Sumitomo Mitsui Banking Corp. have joined a US$147 million Africa-focused venture capital fund, marking a significant push by Tokyo into the continent’s startup ecosystem.
The fund, Novastar Ventures Africa People and Planet Fund III, aims to bridge the funding gap for African startups while offering Japanese investors co-investment rights into portfolio companies. The structure positions them as potential strategic acquirers, providing a vital exit path for regional entrepreneurs.
According to Novastar partner Steve Beck, the fund’s limited partners also include SBI Holdings Inc., Mitsui O.S.K. Lines Ltd., and the Japan International Cooperation Agency (JICA), alongside other institutional backers such as British International Investment, Norfund, Swedfund, Proparco, and COFIDES. JICA’s $10 million commitment, signed in August 2025, marked its first participation in an African VC vehicle.
“The Japanese investors want access to knowledge and deal flow on the continent,” Beck told Bloomberg News. “We are also giving them co-investment rights into the companies.” These rights allow limited partners to deploy additional capital directly into promising startups alongside the fund, effectively buying an early option on Africa’s most promising ventures before they reach international markets.
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The fund comes at a time when U.S.-based venture capital has sharply reduced activity in Africa. In 2025, Africa-focused VC funds raised only US$107 million across six final closes, an 87 percent decline from the prior year, and no fund exceeded US$100 million for the first time since 2021. Meanwhile, over 60 Japanese investors backed more than 190 deals on the continent in the same period, spanning corporate venture arms, banks, and public agencies.
“The backing by large Japanese corporations reflects a domestic strategy,” Beck said. With Japan’s population contracting, corporate cash reserves need deployment in high-growth markets, and Africa’s projected population of 2.5 billion by 2050 offers unmatched consumer growth potential.
Sumitomo Mitsui Banking Corp. participated through its Social Value Creation Investment Fund, a framework aimed at co-developing businesses aligned with sustainability priorities.
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Focus on greentech and scalable startups
Novastar Ventures has targeted companies that combine rapid growth with planet-positive technologies. Fund III has invested in electric bus company BasiGo, Greenwheels—which manages Uber’s two-wheeler electric fleet in Kenya—and ARC Ride, operating battery-swapping infrastructure for e-mobility. The fund also backs Egypt’s Breadfast, which raised $50 million in early 2026, and Nigerian online food company Chowdeck, electrifying its delivery fleet.
The co-investment rights embedded in Fund III represent a structural innovation for African venture exits. While seed-level funding has grown, Series B and C rounds remain rare, limiting opportunities for entrepreneurs to scale. Japanese corporates, with deep pockets and long-term investment horizons, could provide strategic exits where European and U.S. investors have yet to deliver.
Expanding footprint in Africa
The new fund extends Novastar’s geographic reach into South Africa, previously untargeted, coinciding with growing concentrations of capital in established ecosystems. Egypt led Q1 2026 funding with $190 million, followed by South Africa at US$157 million, according to Condia funding tracker data.
Analysts note that the first Japanese corporate acquisition of a Fund III startup would signal that African ventures can generate exits at industrial scale, potentially triggering a significant expansion of Japanese institutional capital on the continent.
“Novastar is positioning Japan as a long-term partner for Africa’s next generation of startups,” Beck said. “This is a critical moment for bridging the gap between early-stage ventures and global-scale growth opportunities.”
