Denis Opudo
It is now one week since the president of France, Emmanuel Macron gave out $76 million funds for African startups at VivaTech 2018. French Development Agency (AFD) will in charge of the administration of the funds. The AFD gave details to the public on how the so-called le nouveau fonds will be used. Christine Ha, the digital task team leader at AFD, said that the funds would be divided into three parts.
She said that $11.7 million (€10M) would go for technical assistance mainly to support Africa’s ecosystem. Moreover, €5M will be set aside for loans that will be free of interest to high potential pre-seed startups. According to her, $58M (€50M) will be used for investments based on the equity in series A to C startups. The technical assistance will be channeled in the form of grants to coding programs, hubs, incubators, and accelerators. According to Ha, the pre-seed startup loans will be given information of cash of up to $100K. This will be provided as early funding to give entrepreneurs enough time to prototype, launch, and experiment.
Proparco a development finance institution (DFI) will administer the VC startup funding worth $58M. AFD owns part of the DFI. Generally, the money will come from the balance sheet of Proparco. Furthermore, part of it will go to the investment of VC funds in Africa. Proparco has invested in many focused funds in Africa like Partech Ventures and TLcom Capital. Ha said that the company would possess the equity shares. It will act as a limited partner when investing in VC funds. Startups across Africa can apply for a portion of the $58M through any of Proparco’s offices in Africa. The offices include Johannesburg, Nairobi, Lagos, Douala, and Casablanca.
Ha said that Proparco and AFD are targeting young and innovative startups. These are startups that are in a position to solve various challenges. The challenges include energy, access to financial services, education, health, the creation of jobs, affordable goods and services and are in a position to grow their businesses in Africa. Both the technical assistance and loan portions of the funds will be available at the beginning of 2019. AFD is still working on some options that will help in the implementation of the funds. The possibilities include depending on local actors using Digital Africa platform. The Digital Africa platform will put up a new online site in November this year. The site will be equipped with resources for startup entrepreneurs.
The analysis of the usage of the French new Africa fund comes 15 months after the announcement of the African VC. These include $40M at TLcom Capital, $2B Rise fund of TPG Growth and Partech Ventures $70M. The total amount is roughly compared to the VC value of Silicon Valley, and it is a lot for the startup ecosystem. This is given the fact that the ecosystem approximately attracted $400M only in four years ago.
