Novastar Ventures

Direct investor

User Profile

Novastar backs early stage businesses in East Africa led by entrepreneurs with the capability and ambition to transform markets at the base-of-the-pyramid (BoP). These enterprises address proven demand for basic goods and services with innovative business models that widen access, improve quality, and lower cost for the mass market. Over the past four years Novastar’s principals – together with a private investor circle called SpringHill Equity Partners – have built an investment portfolio that demonstrates the Fund’s central thesis: A disciplined venture capital approach to investing in innovative early-stage businesses serving BoP markets can generate attractive financial returns and large-scale social benefits for low-income households. Novastar was appointed as the first investee of the DFID Impact Fund managed by CDC in January 2014.

IRIS Use

Novastar Ventures targets breakthrough businesses serving base-of-the-pyramid (BoP) markets. “Breakthrough businesses”: (1) Can grow rapidly to scale by meeting mass (low-income) market demand for basic goods and services like education, healthcare, housing, information and energy. Rapid growth to scale is achieved by: (i) satisfying latent demand, not perceived needs; (ii) joining, shaping & expanding existing markets rather than seeking to create new ones (unlike technology businesses); and (iii) addressing the twin problems of access and affordability. (2) Innovate business models and adapt technologies to profitably widen BoP market access, reduce cost and price, and improve quality. (3) Thereby generate attractive financial returns and very large scale social benefits to BoP consumers. Novastar is the first recipient of investment from the DFID Impact Fund managed by the CDC (The Impact Fund). The Impact Fund prioritizes IRIS metrics as a useful tool to enable integrated reporting of both financial and social performance. In establishing the investment terms, the Impact Fund and Novastar worked together to determine the most relevant metrics to track.