African Development Bank invests US$7.5 million to boost innovative start-ups
The Board of Directors of the African Development Bank approved a US$7.5 million equity investment in Africa Tech Ventures (ATV) before the turn of the year to boost operations of highly scalable companies that use technology to innovate in key sectors such as consumer goods, corporate services, education, logistics, energy, fintech, agriculture or healthcare.
Africa Tech Ventures (ATV) was founded by a group of passionate investors and entrepreneurs with a solid track record of doing business and investing in Africa.
AVT has an impressive portfolio of East Africa’s most prominent names like Cellulant, Twiga Foods and mSurvey. Among key advisor is the former Permanent Secretary of Kenya’s Ministry of Information and Communication Dr Bitange Ndemo who is the current chair of Kenya’s Taskforce on Artificial Intelligence.
The equity investment is part of the Boost Africa Investment Program, 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.
ATV 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 Bank’s Director for Financial Sector Development.
He noted that 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 ATV is to expand economic opportunities for African youth by providing 15 to 20 start-ups with capital throughout their growth cycle. This will enable them grow from 1 thousand to 1 million users.
In alignment with the Bank’s High 5 priorities, their innovations will contribute to broadening access to finance and using connectivity to reach people in urban, rural and remote locations, thus improving the quality of life of the underserved. The fund focus of early stage technology companies also supports Industrialize Africa and Integrate Africa.
ATV investment thesis further supports the Bank’s strategies, in particular its Regional Integration Strategies (“RISP”) for the respective regions that seek to leverage non-sovereign financing, promote private sector activities and support financial sector integration.
By contributing to building an enabling ecosystem for innovative businesses, the Fund also supports the country strategies of the target regional member countries as regards small and medium enterprises and private sector development and job creation.
The US$50 million Fund intends to hold a first closing in second quarter of 2019 and a final closing 12 months thereafter.