Seedstars Africa Ventures has received a $30 million capital commitment from EIB Global, an arm of the European Investment Bank, which becomes the first major institutional investment for its first pan-African venture capital fund.
The new commitment follows an $8 million investment from the fund’s anchor investor, French private equity firm LBO France. The fund targets to close at between $80 million and $100 million to back seed and Series A startups, and offer follow-on funding up to Series B, bridging an extensive capital gap, and supporting startups beyond accelerator programs.
To launch the fund, the VC firm’s partners Maxime Bouan, Tamim El Zein and Bruce Nsereko-Lule teamed up with the Seedstars Group, an emerging markets accelerator, tapping its infrastructure and market access in Africa.
The firm said the larger-than-average fund (for Africa) will provide “capital well suited to the needs of entrepreneurs” in the continent, bridge funding gaps in regions beyond the big four (Egypt, Kenya, Nigeria and South Africa) and provide operational and business support to founders.
“When the team launched in 2020, there was very little capital available beyond acceleration, so there was a clear need to provide more capital at this stage. The team wanted to be pan-African from the onset and be able to provide hands-on support to portfolio companies through a targeted early-stage investment strategy,” said Bouan.
“We approached Seedstars with a win-win opportunity to build a complementary post-acceleration fund that would leverage some of the resources and market access that they had already built. This would contribute to strengthening the continuum of capital by offering different types of funding suited to the entrepreneurs’ maturity, and catalyzing international and local follower investor capital.”
The Paris and Nairobi-based VC firm will make initial investment of $250,000 to $2 million, and follow-on funding of up to $5 million, in up to 30 startups. This is in addition to granting the entrepreneurs access to Seedstars’ tools, networks and visibility. The VC firm says the combination of capital and strong support for early-stage startups is needed but still relatively rare on the continent.
Seedstars Africa Ventures said that while the fund is sector-agnostic, it is keen on startups that address basic needs such as education, healthcare and utilities, or enhancing goods, services and efficiency.
Additionally, they are big on tech startups but do not “shy away from investing in innovative brick-and-mortar businesses that get an unfair advantage from digitalization.”
The firm also plans to invest up to 50% of the fund in Francophone Africa, a region that continues to be an investment destination for emerging VCs owing to lower competition, a massive market opportunity and high-quality and better-priced deals, in comparison to the more mature Anglophone regions.
Commenting on the investment, which is backed by EU’s ACP Trust Fund and Boost Africa program, EIB head of regional hub for East Africa Edward Claessen highlighted the importance of backing funds in Africa saying they play an important role in growing and strengthening the continent’s startup ecosystem. Besides, he noted funds like Seedstars Africa Ventures are invested in the continent and back founders that create jobs and contribute to the growth of economies.
Through initial funding from LBO France, the VC firm has already invested in four businesses, including Kenya’s internet service provider Poa Internet; Nigeria’s grid management SaaS for electricity distribution utilities, Beacon; Power Services agritech Shamba Pride; and payments company Bizao. It is now set to accelerate investments following the new funding.
Outside the pan-African fund, the Seedstars Group has also invested in 26 companies in Africa through its Seedstars International Ventures Funds I and II.