Tofino Capital, a venture capital firm that focuses on early-stage entrepreneurs in emerging regions, has announced the establishment of a $10 million fund. It is announcing the initial close of this fund at $5 million, with a final close expected in nine months. Eliot Pence and Aubrey Hruby formed the business with the goal of investing in entrepreneurs in Africa, Asia, Latin America, and the Middle East. “The fund’s fundamental concept is to focus on huge markets with hundreds of millions of people and limited access to venture finance.” So it excludes China, India, Brazil, and other large regions with a lot of venture funding,” said general partner Pence in an interview with TechCrunch.
“What we’re talking about here is places like Bangladesh, Egypt, Nigeria, Pakistan, the Philippines, and Mexico, and that’s our bet – places where venture capital is literally under $5 per capita, and that’s what’s piqued people’s interest in this next wave of huge markets.” Tofino Capital, according to Hruby, focuses in B2B companies, particularly those with fintech, logistics, and markets themes. The founding partners have worked together for 15 years with a number of U.S. enterprises and family offices active in frontier market investing, including the Whitaker Group and the Atlantic Council.
Pence and Hruby started InsiderPR, a public relations agency that works with “invisible entrepreneurs seldom mentioned in global media,” according to Hruby. InsiderPR is a well-known African tech PR business that has worked with over 100 startups, including SWVL, Flutterwave, and Foodology. But their contributions to Africa’s IT industry go beyond co-founding a public relations business. In 2015, Hruby co-wrote a book about the continent’s potential to become a global powerhouse with former TechCrunch columnist Jake Bright. At one time, she even served as an adviser to AOL’s Steve Case on investments in African firms.
The combination of these experiences, as well as early involvement in emerging markets innovation, provided the partners with the necessary firepower and access to become angel investors down the road. “For several years, we’ve been exposed to and on the front lines of Africa tech, and we’ve done some angel investment.” “And that angel funding has occurred as a result of InsiderPR, which provided entrepreneurs with possibilities at a very early level,” Hruby explained.
In 2018, they made their first angel investment in Seamless HR, and since then, they’ve funded 11 other companies, including Sabi, Mecho Autotech, and Eksab. They began toying with the notion of establishing a venture fund in late 2021. Tofino Capital is the result, and it takes things up a step for the partners by making them institutional equity participants for the first time. They haven’t written any checks from this money yet.
Tofino Capital wants to invest $50,000 to $500,000 in early-stage firms, mostly in the pre-seed and seed phases, according to Pence. Moreover, unlike the usual premise, in which VC companies rely on a single company in their portfolio to repay the investment, Tofino Capital intends to take a different strategy, in which it “gets in early and gets out early, too.” “We don’t believe Africa’s next development phase will be of the $1-42 billion Flutterwave and Andela variety.” “It’ll be expanding these $200-$500 million mid-market enterprises,” Pence said.
However, it isn’t all. Tofino Capital, although being a very early-stage-focused business, is also interested in “very late” firms, or those that are about to go public, according to Pence. It’s a bold strategy, but Pence believes that investing on both sides of the spectrum is the most risk-adjusted way to invest in emerging economies. However, as a tiny fund with check sizes around $1 million, how does the business plan to persuade Series C and later companies to give up some equity? Some businesses rely on outside funding.
