Funding

EIB Global announces $30 million investment in Seedstars Africa Ventures I, a VC fund for African entrepreneurs

Innovative businesses and start-ups across Africa will benefit from better access to risk capital thanks to a  US$30 million equity investment by EIB Global in the Seedstars Africa Ventures I venture capital fund. 

 Increased access to capital will allow companies to grow, creating skilled jobs and improving products and  services for businesses and consumers. The fund will invest in companies developing and implementing  digital technologies, in particular those addressing basic needs such as education, healthcare and utilities,  or enhancing goods, services and value-chain efficiency. 

“Encouraging and promoting innovation and digitalisation is crucial to developing strong and sustainable  economies,” said EIB Vice-President Ambroise Fayolle. “African entrepreneurs hold the key to the  continent’s future, creating jobs, reducing inequality and improving quality of life. The EIB, as part of Team  Europe, is committed to supporting African businesses, and we are proud of the success of Boost Africa and the ACP Trust Fund.” 

Seedstars Africa Ventures I was created by Maxime Bouan, Tamim El Zein and Bruce Nsereko Lule, in  partnership with Seedstars, a global organization that invests and supports entrepreneurs from emerging  markets, and LBO France, a multi-country multi-specialist investment platform that seeded the initiative and  provided a material anchoring commitment, +30 years’ investment experience in small and venture  companies and environmental, social and governance (ESG) expertise.  

The Nairobi and Paris-based team explained that “the anchoring ticket provided by the European  Investment Bank is a testament to our investment thesis and the work we do across Africa. It signals the  relevance of our positioning as well as the effectiveness of our support to portfolio companies. This  recognition will further help us onboard both African and foreign investors in the Fund to reach our US$80  to US$100 million target size.”  

Robert Daussun, Chairman of LBO France and Stéphanie Casciola, CEO of LBO France stated, “Identifying  areas with high growth potential is at the heart of LBO France’s strategy, and we have been reinforcing our  position in Africa by targeting highly dynamic sectors and supporting disruptive entrepreneurs. Our  commitment to Seedstars Africa Ventures is part of our strategy to offer a range of diversified alternative  assets to our investors and allow them to participate in Africa’s growth story, with a strong ESG ambition.  Similarly, we took in 2023 a majority position in CGF Bourse, a brokerage and asset management firm  headquartered in Dakar and we are also the majority shareholder in Joliba Capital, a private equity fund  based in Abidjan and focused on francophone Africa.” 

“The digital sector is a key driver of growth and innovation. Small and medium-sized enterprises, together  with start-ups, are fueling the digital economy. Kenyan and African digital economies have tremendous  potential and helping entrepreneurs access finance can be a game changer to foster quality growth and Public jobs, a common priority for both the EU and our African partners. With Global Gateway, the EU is investing  in Africa’s digital transformation and helping provide the right conditions for digital economies to thrive – as  demonstrated with the recent digital economy package in Kenya,” said European Commission Vice President Margaritis Schinas. 

Venture capital investments reached US$4.8 billion in Africa in 2022, a +270% increase from the  US$1.3 billion invested in 20191. Despite this tremendous growth, a significant equity gap continues to exist  at the early stages of funding on the continent, calling for more investors in the space. Seedstars Africa  Ventures invests in Seed+ and Series A rounds, with an ability to follow-on significantly, effectively bridging  the pools of capital available.

The Fund leads investment rounds to facilitate syndication and provides  strong operational support that is critically lacking in the regional venture capital space. On top of its internal,  on-the-ground teams, the Fund uniquely leverages support resources provided by the acceleration platform  of Seedstars. 

The Fund expects to reach a first close early this year but has already completed four transactions, namely in Beacon Power Services, Poa! Internet, Shamba Pride and Bizao. Each company is building an innovative  solution to tackle some of the continent’s most pressing needs.

For instance, Lagos-based Beacon Power  Services (BPS) has developed proprietary grid management software and data solutions for Africa’s power  industry. BPS seeks to improve the reliability and quality of the continent’s energy supply through the  creation of smart grids, by leveraging extensive data collected on the ground.

As of September 2023, BPS  was working with four utility companies in Nigeria and Ghana connecting to a population of over 60 million  and has reduced grid energy losses by an average of 25% per utility. In Lagos, this translated into three  additional hours of energy daily per household. Better access to grid electricity also allows the homes and  businesses connected to BPS’ clients to rely less on diesel generators, which the company estimates has  saved 1.7 million tons of carbon dioxide in 2023. 

Global pressures in the last 18 months have made it more difficult for companies to access finance, in  particular at the earliest stages of developing the business. This has limited the expansion of innovative  technology companies. Fostering private sector development and the digital economy will contribute to  inclusive economic growth, reducing economic and social disparities. Digitalisation is a key part of the  economic and social development of many African countries. It is also a core pillar of the European Union’s  Global Gateway strategy. 

The US$30 million EIB Global investment is backed by the EU, through US$20 million from the ACP Trust  Fund and US$10 million from the Boost Africa programme.

With this investment, the EIB has now fully  deployed Boost Africa, a programme launched in 2016 with the aim of boosting sustainable jobs and  prosperity through venture capital for African entrepreneurs. Under Boost Africa, the companies invested  in by Seedstars Africa Ventures 1 will also benefit from technical assistance to develop business skills and  expertise, funded by the EU. 

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