Newly-established investment fund Africa Tech Ventures has raised US$7.5 million from the African Development Bank (AfDB) to back highly scalable companies that use technology to innovate across key sectors.
The funds raised from the AfDB come as part of the Boost Africa Investment Programme, a joint collaboration between the bank, the European Commission (EC) and the European Investment Bank (EIB), which has already committed US$10 million to the fund.
Africa Tech Ventures will provide seed investment to early-stage companies that improve and facilitate access of essential goods and services to the underserved, effectively promoting inclusive growth.
“Africa is experiencing rapid mobile penetration. This provides huge opportunity to the development of start-ups and small and medium scale enterprises. But there is a scarce risk capital to venture capital funds targeting early stage businesses,” said Stefan Nalletamby, the AfDB’s director for financial sector development.
He said the equity investment will “leverage innovations to leapfrog technologies and harness key opportunities that have the potential to scale across Africa”.
The overarching goal of Africa Tech Ventures is to expand economic opportunities for African youth by providing 15 to 20 startups with capital throughout their growth cycle, enabling each of them to grow to a user base of one million people. The US$50 million fund intends to hold a first closing in the second quarter of 2019 and a final closing 12 months thereafter.