A New $10.5m Fund For African Startups From AFDB
The African Development Bank (AFDB) Board of Directors has approved a €9.8 million equity investment to promote venture capital investments in African startups from the seed to growth stages.
The AFDB will contribute €7 million to the equity fund from its own coffers, while the European Union (EU) will contribute €2.8 million through a collaboration with the Organization of African, Caribbean, and Pacific States (OACPS).
The investment will assist Cathay-AfricInvest Innovation Fund in meeting its goal of raising €110 million to invest in over 20 early-stage enterprises in Sub-Saharan Africa. The Innovation Fund focuses on financial inclusion (financial technology and insurance technology), retail and logistics platforms for online and mobile users, healthcare innovations, and pay-as-you-go, off-grid energy technologies.
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More recently, the Innovation Fund has broadened its focus to include start-ups that are capitalizing on new digital opportunities created by the Covid-19 epidemic, or that have a high potential to aid in the fight against the coronavirus. AfricInvest Capital Partners and Cathay Innovation SAS are co-sponsors of the Mauritius-based Fund.
AFDB Director for Financial Sector Development Stefan Nalletamby stated: “The Bank’s clearance marks another significant step forward in the implementation of the Boost Africa Program and its collaboration with the EU, OACPS, and the European Investment Bank. It demonstrates the priority placed on the continent’s tech-enabled high growth entrepreneurs, as well as the critical role of AfricInvest and Cathay Innovation in assisting this crucial business segment in Africa in achieving Africa’s growth, transformation, and integration goals.”
Over 40% of projects in its current pipeline involve more than one African region. Another third of the start-ups in which it invests are in West Africa. The health care sector accounts for one-quarter of all investee start-ups.
Other investors include Germany’s KfW/Allianz GI’s AfricaGrow, France’s public investment bank BPI and development financing organization Proparco, as well as Swiss impact investor Obviam.
The Bank’s funding is expected to hasten the emergence of a new generation of successful African entrepreneurs who will act as role models for younger innovators. Through suitable technology and innovation, it will also help young and women-led start-ups, as well as expand access and inclusion to financial and “real sector” services and goods.
Despite the fact that venture capital firms invested $2 billion in African technology in 2019, a 73 percent increase over the previous year, funding from this source for innovative start-ups in Africa remains very low. Furthermore, relatively few venture capital funds specializing in early-stage technology start-ups have successfully closed rounds.
The African Development Bank’s investment is in line with the program’s goals of enhancing entrepreneurship and innovation across Africa, creating new and high-quality jobs for young Africans, and contributing to the development of an efficient entrepreneurial ecosystem in Africa.
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Boost Africa, a partnership between the African Development Bank, the European Union, the Organization of African Caribbean and Pacific States (OACPS), and the European Investment Bank (EIB), provides financial assistance to investment funds that target early-stage innovative enterprises in Sub-Saharan Africa.
startups AFDB startups AFDB
Charles Rapulu Udoh
Charles Rapulu Udoh is a Lagos-based lawyer, who has several years of experience working in Africa’s burgeoning tech startup industry. He has closed multi-million dollar deals bordering on venture capital, private equity, intellectual property (trademark, patent or design, etc.), mergers and acquisitions, in countries such as in the Delaware, New York, UK, Singapore, British Virgin Islands, South Africa, Nigeria etc. He’s also a corporate governance and cross-border data privacy and tax expert.
As an award-winning writer and researcher, he is passionate about telling the African startup story, and is one of the continent’s pioneers in this regard. You can book a session and speak with him using the link: https://insightsbyexperts.com/view_expert/charles-rapulu-udoh