In Summary
- EIB Global equity investment of US$30 million in Seedstars Africa Ventures I supports risk capital for African entrepreneurs, boosting growth and job creation.
- The fund will invest in companies leveraging digital technologies to provide essential services and increase business efficiency.
- The European Union backs the EIB Global investment through the ACP Trust Fund and the Boost Africa programme.
EIB Global’s $30 million investment in Seedstars Africa Ventures I will boost access to risk capital for innovative African businesses, promoting growth, creating jobs, and enhancing products and services, especially in digital technologies addressing essential needs like education and healthcare.
Seedstars Africa Ventures I was created by Maxime Bouan, Tamim El Zein and Bruce Nsereko Lule, in partnership with Seedstars, a global organisation 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 and social 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 and the effectiveness of our support to portfolio companies. This recognition will help us onboard African and foreign investors in the Fund to reach our US$80 to US$100 million target size.”
Venture capital investments reached US$4.8 billion in Africa in 2022, a +270% increase from the US$1.3 billion invested in 2019[1]. 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 solid 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 Seedstars’ acceleration platform.
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 by creating 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.
Global pressures in the last 18 months have made it more difficult for companies to access finance, particularly at the earliest stages of business development. This has limited the expansion of innovative technology companies. Fostering private sector development and the digital economy will contribute to inclusive economic growth, reducing economic and social disparities. Digitalisation is a key part of many African countries’ economic and social development. It is also a core pillar of the European Union’s Global Gateway strategy.
