The long-term lending institution of the European Union, the European Investment Bank (EIB) has announced a $30 million equity investment in Seedstars Africa Ventures I, a venture capital fund for African innovative entrepreneurs.
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.
At a time when funding for African startups seems to be drying up, the EIB investment brings some leverage to the continent by boosting access to capital which will allow companies to grow, create skilled jobs, and improve products and services for businesses and consumers.
What EIB is saying
Commenting on the investment, EIB’s Vice-President Ambroise Fayolle said:
- “Encouraging and promoting innovation and digitalization is crucial to developing strong and sustainable economies. 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.”
Also speaking, European Commission Vice President Margaritis Schinas said:
- “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 in fostering quality growth and 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.”
The venture capital 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.”
What you should know
Venture capital investments reached US$4.8 billion in Africa in 2022, a +270% increase from the US$1.3 billion invested in 2019.
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.
