In a significant move to foster the growth of innovative enterprises across Africa, the Board of Directors of the African Development Bank (AfDB) announced on Wednesday its decision to invest $10.5 million in Seedstars Africa Ventures S.L.P. The venture capital fund, renowned for supporting high-growth companies in Sub-Saharan Africa, will utilize this capital injection to expand its presence on the continent and further its mission of catalyzing innovation.
The investment, sanctioned by AfDB, comprises $7 million from the bank's ordinary resources and an additional $3.5 million from the European Union Boost Africa program. This strategic partnership aims to empower Seedstars Africa Ventures (SAV) to not only raise additional funds but also to attract more investors, thereby bolstering the financial landscape for budding businesses in the region.
Seedstars Africa Ventures specializes in early-stage investments, focusing on enterprises that exhibit robust growth potential while actively addressing market challenges. The fund's primary focus lies in Sub-Saharan Africa, particularly targeting markets that may be overlooked by traditional investors. Notably, there is a special emphasis on French-speaking countries such as Senegal, Côte d’Ivoire, Benin, and Cameroon. However, SAV has also made strategic investments in Ghana, Uganda, and Tanzania.
By injecting capital into Seedstars Africa Ventures, the AfDB seeks to contribute to the development of a thriving ecosystem for innovation and entrepreneurship across the continent. This collaborative effort between the African Development Bank and SAV is poised to empower businesses that not only generate income but also play a crucial role in addressing pressing challenges within their respective markets.
This investment aligns with the AfDB's commitment to fostering economic development and job creation in Africa by supporting initiatives that drive innovation and entrepreneurship. The infusion of $10.5 million into Seedstars Africa Ventures represents a strategic step towards amplifying the impact of innovative businesses, ultimately contributing to the sustainable growth of economies in the Sub-Saharan region.
As a venture capital fund of USD 75 million, Seedstars Africa Ventures targets the start-up and launch phases of businesses tackling key constraints in the market. Initial investments are around the EUR 250,000 mark, followed by additional capital injections of €5 million to support their growth.
SAV focuses on financial inclusion and the technologies that equip businesses (fintech and insurtech); retail sales and logistics platforms that target the online and mobile consumers market; health-related technologies; pre-paid, off-grid energy; and more generally, the adoption of technology in businesses, particularly in the food-processing industry and value chains.
It is estimated that the fund will help create 9,000 full-time jobs, 50% of them for women, and have a significant economic impact.
The fund’s objectives are in line with those of Boost Africa, which aims to invest in innovative start-ups that are growing strongly and having a positive social impact. Its investment strategy will strengthen that of the African Development Bank, which links entrepreneurship, investment and economic growth to poverty reduction and sustainable development. It will also contribute to the Bank’s operational priorities – the High 5 – by supporting start-ups operating in key sectors, such as agriculture, health, industrialization and off-grid energy. Finally, the investments will contribute to strengthening regional integration and improving the lives of people in Africa.
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