A $30 million fund has been formed by Rali cap, an early-stage venture capital business focused on emerging markets fintech. The firm, which was formerly known as Rally Cap Ventures, completed its first close of $20 million (its initial objective) last month before raising the fund size, indicating significant LP interest. The two-year-old VC fund makes pre-seed and seed investments in B2B and API-first fintechs across Africa, Latin America, and South Asia. By the end of June, it intends to complete a second closing.
Rali cap began as a collective before becoming a fund, according to Hayden Simmons, the managing partner who founded the business in 2020. Simmons, who has a decade of experience working in business development and partnership roles for emerging market fintechs such as Migo, Novi, and Juvo, saw a potential in bringing together a community of “experts” (primarily operators and angel investors) to collaborate on deal sourcing, due diligence, and founder support via Slack and invest in emerging market fintechs.
On a teleconference with TechCrunch, Simmons said, “We felt we could outperform traditional venture models in driving value to founders and getting more people involved in the venture capital game this way.” This collective has over 240 individual LPs after two years. Fintechs including Wave, Block, MercadoPago, Rappi, Flutterwave, Yoco, Visa, Plaid, Stripe, and Coinbase, as well as e-commerce platforms like Jumia and Shopify, have executives and managers among them. About 40% of them are headquartered in the United States, with the remainder scattered across Africa, Latin America, and Southeast Asia, where they spent more than $6 million last year.
However, most collectives with this or a similar strategy eventually aim to build and operate funds (Future Africa and AngelList are two examples), which is exactly what rali cap did. “By the end of 2020, we realized it was an overly passive strategy,” Simmons said. “We had this really active community of fintech angels, but we believed it was more important to have our own cash in order to fund the transactions we were witnessing.”
We’ve also seen this with angel investors who have gone on to become well-known solo venture capitalists, such as Olumide Soyombo of Voltron Capital, and Elad Gil and Lachy Groom worldwide. rali cap raised $2 million last year, which it has subsequently invested. As a fintech-focused organization, it ensured that the limited partners for this new $30 million fund were also fintech-focused. Breyer Capital, Propel VC, Better Tomorrow Ventures, FT Partners, Bain Capital, Lateral Capital, a few family offices, high-net-worth individuals, and a multibillion-dollar crossover fund noted for investing in smaller funds are among them.