Six months after its launch, the Digital Africa seed fund for the development of innovative entrepreneurship in Africa has got off to a promising start. A third of the envelope has already been invested to support digital start-ups, which have benefited from individual financial and technical assistance.
The Digital Africa seed fund was launched in December 2019. Through this €15 million envelope with a 3-year disbursement period, Agence Française de Développement (AFD) is supporting six programs to support and finance African digital start-ups in the seed stage.
“Validating a concept, recruiting a team, developing a technology, setting up… the seed phase is crucial to the future success of a company. It is risky, but attracts few investors”, says Jean-Pierre Barral, Director of AFD’s Energy and Digital Transitions Department. This is why 87% of African start-ups do not have access to any financing.
Experts central to start-ups
Six months after the fund was set up, a third of the budget envelope has been invested to finance the implementation of programs and the follow-up of the first digital start-ups eligible for them. “We have contacted or been contacted by just over 500 start-ups in Africa”, says Erik Yong, CEO and co-founder of GreenTec, one of the program operators supported by the Digital Africa seed Fund, “We are currently providing closer support to about twenty of them.”
For further reading: Our web page on the Digital Africa seed fund
To date, these candidates have benefited from some 300 hours of expertise on the strategic, financial and operational aspects. Five of them have also obtained financing ranging between €20,000 and €50,000.
This formula providing liquidity and experts who act as co-founders of the company at these early stages attracts start-ups. “We are the brain back-ups, specialists who help promising businesses grow. Some will manage to scale up and attract investors”, says Maxime Bayen, a venture builder at GreenTec, who shares his expertise with six companies.
Supporting an innovative ecosystem
In addition to directly supporting start-ups, the Digital Africa seed fund also seeks to develop and structure the African ecosystem of hubs that assist them. This is why AFD has partnered with the innovative project incubator Bond’Innov which, through the Afric’Innov program, has just opened an office in Dakar.
“Our African partners had been urging us to transfer our expertise locally for a long time”, says Ninon Duval, Director of Bond’Innov, “The opening of an office in Senegal has strengthened the Afric’Innov network and professionalized the support structures for innovative entrepreneurship.”
For further reading: How to benefit from programs supported by the Digital Africa seed fund
“The launch of our activities was disrupted by Covid-19”, explains Daouda Thiaw, Executive Director of Afric’Innov in Dakar, “But this crisis has not stopped us from being very responsive and offering webinars to the 75 members of our community.” Despite the health crisis, the scheme supported by the seed fund has managed to remain responsive and adapt to the needs of start-ups and their ecosystem.
“When my company was hit hard by the consequences of the epidemic, I was able to benefit from an interest-free loan of €25,000 euros which allowed me to maintain my activity”, says Alvine Choupo, co-founder of VuSur, a Cameroonian start-up that promotes and facilitates on-line buying of African and foreign products.
Webinar learning week
As part of the program implemented by Afrilabs, another partner of AFD, the strengthening of support structures has also led to a learning week, a virtual event gathering 670 participants. “At AFD, we are extremely satisfied with the promising start of the Digital Africa fund”, says Jean Millerat, Director of AFD’s Digital Division (NUM), “For the next phase, we hope there will be a wave of high-quality promising projects that will promote innovation.”
For further reading: Appropriate funding to support African digital start-ups and their ecosystems
From now until 2022, this fund will also be fulfilling the French President’s promise to support African start-ups and their projects for the assistance they can provide to local communities in terms of facilitating their access to basic services, such as information, training, work and education. This Ivorian start-up provides technology for plastic waste recycling via a web, mobile and text message application.
“The financial and technical assistance managed by the Digital Africa seed fund is helping COLIBA scale up. Our growth is allowing us to extend waste collection to new neighborhoods in Abidjan. Our start-up is stronger and is recognized in the network of innovative African companies. This reputation attracts new investors and has allowed us to multiply our capital by five. Through the training programs supported by the seed fund, our employees are building their skills in fields as varied as finance and marketing.”
Sumundi, a Ghanaian start-up, provides software solutions for small traders to help them manage their stock and accounting.
“The development of our business has been accelerated by the technical assistance we have benefited from through the Digital Africa seed fund. Our company is eligible for the venture building program implemented by GreenTec and is helped by this operator’s experts. For the next three years, we will be developing and structuring Sumundi together. It’s very reassuring and rewarding to be surrounded by professionals and to be able to discuss any doubts we have with them.”