EIB Global has invested US$30 million in the Seedstars Africa Ventures I venture capital fund, which will provide innovative businesses and start-ups across Africa with improved access to risk capital.
This increased capital access will enable companies to expand, create high-skilled jobs, and enhance their products and services for both businesses and consumers.
The fund will channel investments into companies that are developing and implementing digital technologies, especially those addressing fundamental needs like education, healthcare, and utilities, or those enhancing goods, services, and efficiency.
“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,” said EIB Vice-President Ambroise Fayolle.
The Fund anticipates reaching a first close early this year, but it has already completed four transactions in Beacon Power Services, Poa! Internet, Shamba Pride, and Bizao. Each of these companies is developing innovative solutions to address some of Africa’s most urgent needs.
For example, Beacon Power Services (BPS), based in Lagos, has developed proprietary grid management software and data solutions for Africa’s power industry. BPS aims to enhance the reliability and quality of Africa’s energy supply by creating smart grids, leveraging extensive on-the-ground data.
As of September 2023, BPS was collaborating with four utility companies in Nigeria and Ghana, serving a population of over 60 million, and has managed to reduce grid energy losses by an average of 25% per utility.
The US$30 million investment by EIB Global is supported by the EU, with US$20 million from the ACP Trust Fund and US$10 million from the Boost Africa programme.
The team based in Nairobi and Paris stated that the anchoring ticket provided by the European Investment Bank validates their investment thesis and their work across Africa.
“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.”
With Global Gateway, the EU is investing in Africa’s digital transformation and helping create the right conditions for digital economies to flourish, as demonstrated with the recent digital economy package in Kenya, according to European Commission Vice-President Margaritis Schinas.
Venture capital investments in Africa reached US$4.8 billion in 2022, a 270% increase from the US$1.3 billion invested in 2019.
Despite this significant growth, a considerable equity gap remains at the early stages of funding on the continent, indicating a need for more investors in this space.
With this investment, the EIB has now fully deployed Boost Africa, a programme initiated in 2016 with the goal 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 receive technical assistance to develop business skills and expertise, funded by the EU.