When one of its portfolio companies needed bridge financing, Beyond Capital Ventures set up a special purpose vehicle to bring new investors to the table and aggregate their smaller checks. It has since replicated such SPVs four more times to help its portfolio companies raise capital amid a protracted equity fundraising slump.
The emerging markets fund manager is now formalizing “SPVs as a service” as a new strategy for supporting growing companies in Africa confronted by a limited number of lead investors or bridge financing options.
Beyond Capital Ventures, which invests debt and equity in high-impact companies in India and East Africa, has completed an SPV to invest more than $800,000 in e-commerce company’s Kasha pre-Series C bridge round. Investors could participate with checks of $50,000 or more. They, represented by the vehicle, serve as one LP on Kasha’s cap table.
The simplicity of the structure makes it possible for smaller investors to invest in companies that are outgrowing angel funders, but for which $500,000 or $1 million is still a meaningful amount of money, says Yazhari.
“Once they’re at a Series B or Series C stage, companies no longer want to have individual angel investors on their cap tables anymore, even though there’s still interest from those investors,” she says.
Strategic evolution
Beyond Capital Ventures, which is based in LA, Nairobi and Delhi, began as an early-stage equity investor for African and Indian startups providing essential products and services. The firm built its investment model to be more founder friendly than mainstream venture capital: It shares a cut of its funds’ profits with the founders in its portfolio.
“We want a partnership with our investees where we’re bonded in the success of our fund,” Yazhari told ImpactAlphain a prior interview.
In 2024, it launched its first debt fund to provide working capital and bridge loans to its equity portfolio companies in Africa.It’s now onto its second debt fund.
Kasha has been key to the development of Beyond Capital Ventures’ new SPV strategy. The Kigali and Nairobi-based company delivers menstrual care products, contraceptives, pharmaceuticals and other health and hygiene products to low-income women and their families. Beyond Capital Ventures has been a long-time, repeat backer of the woman-led company through its equity and debt funds. The firm made its first investment in Kasha in 2017 from its first equity fund.
Kasha has also been the beneficiary of three of the five SPVs Beyond Capital Ventures has orchestrated; two were for Kasha’s pre-Series B bridge rounds. Kasha raised a $21 million Series B round in 2023.
For most of Kasha’s 10-year history, the company has worked B2C. When USAID was dismantled last year, it left a gaping hole in African healthcare access and logistics. The company has moved into that gap, as a logistics provider for health enterprises.
The latest bridge round will give Kasha the financial runway to close several key enterprise contracts while it prepares to go back to the market for its Series C round.
Venture curious
Beyond Capital Ventures was able to close commitments to the SPV within five weeks. More than half of the investors who participated are also Beyond Capital Ventures’ LPs.
The firm’s hope is that the strategy will serve as an entry point for investors curious about opportunities in Africa, or curious about angel investing.
“Venture and private credit funds aren’t for everyone. This is a way for investors to dip their toe in, while knowing their investment will be professionally managed,” says Yazhari.
For Beyond Capital Ventures, special purpose vehicles are a way to diversify the firm’s revenues and to build a different investment pipeline. The traditional venture model and fee structure is difficult for emerging market fund managers, says Yazhari. With the SPVs, the firm charges between 1% and 2% as a one time fee to the investee for setting up the vehicle, and gets 10% to 20% carried interest (it offers the more favorable terms to its own LPs). It prepares an investment summary for interested investors, and annual reporting thereafter.
Yazhari and her team see the potential for SPVs to serve a purpose beyond bridge rounds for investees. Beyond Capital Ventures is keen to test the scope of capital the vehicles can raise – several million or more, perhaps – and the range of accredited investors interested in participating. An SPV could even serve as a lead investor in cases where Beyond Capital Ventures led a previous round and the company needs a new lead, says Yazhari.
“There just aren’t enough lead investors in Africa,” she says, adding, “I know what it’s like to raise money. If somebody could do this for me as a founder, I would immediately say yes.”
