EIB Global equity investment has announced a US$30 million investment in Seedstars Africa Ventures I aimed to support innovative businesses and start-ups across Africa .
The investment will provide increased access to capital to allow companies to grow, creating skilled jobs and improving products and services for businesses and consumers.
“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.
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 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.
The anchoring ticket provided by the European Investment Bank is a testament to its investment thesis and the workdone 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.
According to Robert, their commitment to Seedstars Africa Ventures is part of the strategy to offer a range of diversified alternative assets to investors and allow them to participate in Africa’s growth story, with a strong ESG ambition.
“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 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.
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.
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.