Grace Ashiru
Seedstars Africa Ventures has achieved a significant milestone by securing a $30 million capital injection from EIB Global, an entity connected to the European Investment Bank. This marks a pivotal moment as it represents the first substantial institutional investment for the venture firm’s inaugural pan-African capital fund.
The infusion of funds follows an $8 million backing from LBO France, the fund’s anchor investor. Seedstars Africa Ventures has set its sights on finalizing its fund within an impressive range of $80 million to $100 million. The primary objective is to provide support to seed and Series A startups, offering assistance with follow-on funding up to Series B. This strategic move aims to address a critical capital gap, empowering startups beyond the limitations of traditional accelerator programs.
In collaboration with Seedstars Group, an emerging markets accelerator, the venture capital firm’s partners Maxime Bouan, Tamim El Zein, and Bruce Nsereko-Lule utilized Seedstars’ infrastructure and market access to initiate the fund. This ambitious endeavor is designed to have a pan-African focus from the very beginning, offering hands-on assistance to portfolio companies through a targeted early-stage investment approach.
The increased fund size, notably significant within the African context, is envisioned to provide “capital well-suited to the requirements of entrepreneurs.” Seedstars Africa Ventures aims to address funding gaps in regions outside of the well-established quartet of Egypt, Kenya, Nigeria, and South Africa. Additionally, the firm is committed to delivering operational and business support to founders.
Bouan explained the reasoning behind the initiative, emphasizing that in 2020, there was a significant scarcity of capital available for startups beyond the acceleration stage. Consequently, there was a clear necessity to provide more financial support at this crucial phase. The primary goal is to fortify the spectrum of available capital options by offering various funding opportunities tailored to the maturity levels of entrepreneurs while also encouraging both local and international investors to participate.
Seedstars Africa Ventures intends to make initial investments ranging from $250,000 to $2 million and is open to providing follow-on funding of up to $5 million for as many as 30 startups. The firm’s overarching objective is to bolster the startup ecosystem by granting entrepreneurs access to Seedstars’ resources, networks, and increased visibility. This unique blend of financial backing and robust early-stage support remains a relatively uncommon offering within the African context.
The fund maintains a sector-agnostic approach but shows a strong interest in startups that address fundamental needs such as education, healthcare, utilities, and those that improve goods, services, and efficiency. The firm is open to tech startups and also welcomes innovative brick-and-mortar businesses that benefit from digitalization.
Seedstars Africa Ventures intends to allocate a maximum of 50% of the fund to Francophone Africa. This region is considered an investment hotspot due to lower competition, substantial market opportunities, and attractive deals when compared to more mature Anglophone regions.
Edward Claessen, the EIB head of the regional hub for East Africa, has highlighted the significance of supporting initiatives like Seedstars Africa Ventures in Africa. He underscores their crucial role in nurturing startup ecosystems. This investment, supported by the EU’s ACP Trust Fund and Boost Africa program, aligns to aid founders who contribute to job creation and economic growth.
Seedstars Africa Ventures, having already invested in four businesses, including Poa Internet in Kenya, Beacon in Nigeria, Shamba Pride in agritech, and Bizao in payments, is now positioned to expand its investments following a substantial capital infusion.
In addition to the pan-African fund, the Seedstars Group has previously invested in 26 companies in Africa through its Seedstars International Ventures Funds I and II.
