Paul Arithi 
EIB Global announces new investment in Seedstars Africa Ventures I, a venture capital fund for African innovative entrepreneurs
- EIB Global equity investment of US$30 million in Seedstars Africa Ventures I supports risk capital for entrepreneurs across Africa, boosting growth and job creation.
- The fund will invest in companies leveraging digital technologies to provide essential services and increase efficiency for businesses.
. The EIB Global investment is backed by the European Union through the ACP Trust Fund and the Boost Africa programme.
Innovative businesses and start-ups across Africa will benefit from better access to risk capital thanks to a US$30 million equity investment by EIB Global in the Seedstars Africa Ventures I venture capital fund.Increased access to capital will allow companies to grow, creating skilled jobs and improving products and services for businesses and consumers.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 efficiency.
“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 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 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.
Our commitment to Seedstars Africa Ventures is part of our strategy to offer a range of diversified alternative assets to our investors and allow them to participate in Africa’s growth story, with a strong ESG ambition. Similarly, we took in 2023 a majority position in CGF Bourse, a brokerage and asset management firm headquartered in Dakar and we are also the majority shareholder in Joliba Capital, a private equity fund based in Abidjan and focused on francophone Africa.”
“The digital sector is a key driver of growth and innovation. Small and medium-sized enterprises, together with start-ups, are fuelling 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.
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 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 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.
Key Pointers to Note;
- Many companies, especially start-ups, have difficulty raising capital at competitive rates through conventional channels, i.e borrowing from banks or through IPOs. This constrains their growth and competitiveness. Private equity serves as a powerful tool to fill the gap.
- Private capital is a powerful driver of economic development in Africa. Private Equity Funds, through investment in local enterprises are playing a catalytic role more efficiently by bringing outside funding and technical expertise, thus increasing efficiency in different sectors through direct skills transfer in the companies they operate.
- As the EIB, we support the private sector development and promotion of social impact goals. This is another option for the EIB to ensure financing reaches thousands of SMEs in Africa that need to grow, create jobs and meet the demands of its evolving populations.
- To date, the EIB has committed over EUR 2.5bn in over 124 funds (private equity, infrastructure, microfinance) with a geographic focus entailing Africa. Some of these funds are country-specific, while some have a regional or even a global geographic focus. Jointly, the funds have provided financing (equity and/or debt) to c. 1,500 investees (microenterprises, SMEs, midcaps, infrastructure projects) in Africa.
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, in particular at the earliest stages of developing the business. 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 the economic and social development of many African countries. It is also a core pillar of the European Union’s Global Gateway strategy.
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.
Background information
The European Investment Bank (EIB) is the long-term lending institution of the European Union owned by its Member States. It makes long-term finance available for sound investment in order to contribute towards EU policy goals.
EIB Global is the EIB Group’s specialised arm devoted to increasing the impact of international partnerships and development finance, and a key partner in Global Gateway. We aim to support €100 billion of investment by the end of 2027, around one third of the overall target of this EU initiative. With Team Europe, EIB Global fosters strong, focused partnerships, alongside fellow development finance institutions and civil society. EIB Global brings the Group closer to local people, companies and institutions through our offices around the world.
The African, Caribbean and Pacific Trust Fund (ACP Trust Fund) was created in 2023, building on decades of EIB financing experience in the three regions. It aims to foster the sustainable economic, social and environmental development of African, Caribbean and Pacific countries, with the primary aim of promoting growth and prosperity. The ACP Trust Fund invests in high-impact projects for the private sector by offering technical assistance and financial instruments such as equity, quasi-equity, subordinated debt, risk-sharing and local currency lending.
Boost Africa is a joint initiative of the European Investment Bank and the African Development Bank to enable and enhance entrepreneurship and innovation across Africa, supported by the European Commission and the Organisation of African, Caribbean and Pacific States. The EIB pillar of the Boost Africa programme comprises senior and junior tranche investments into venture capital funds in Sub-Saharan Africa and provides guidance and expert advice to both funds and investee companies.
The Boost Africa programme has supported five other funds with close to €70 million senior and junior equity investments in TLcom Tide Africa, Partech Africa Venture Capital Fund, AfricInvest Venture Capital Growth Fund, the Janngo Capital Start-up Fund, and Atlantica Venture Fund.
About Global Gateway
Global Gateway is the European strategy to boost smart, clean and secure links in digital, energy and transport sectors, and to strengthen health, education and research systems across the world. Through a ‘Team Europe approach’, Global Gateway brings together the EU, its Member States and their financial and development institutions to mobilise the private sector to leverage investments for a transformational impact. It aims to mobilise up to €300 billion in investments. Global Gateway is fully aligned with the UN’s Agenda 2030 and its Sustainable Development Goals, as well as the Paris Agreement.
About Seedstars Africa Ventures
Seedstars Africa Ventures Investment Management is advising the fund Seedstars Africa Ventures I. The company was created by Maxime Bouan, Tamim El Zein and Bruce Nsereko Lule who accumulate together 40+ years of experience investing and working across the continent. Seedstars Africa Ventures I is a generalist venture capital fund investing initial amounts up to US$ 2 million in Seed+ / Series A companies and able to reinvest up to US$ 5 million. With presence and active networks in 25+ countries, the fund is able to invest in and actively support companies throughout Africa. The fund was created in partnership with Seedstars, a global organisation that invests and supports entrepreneurs from emerging markets.
