Dismantle the new French fund for African startups of $76 million

by MMC
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A few weeks after French President Emmanuel Macron unveiled $76 million African seed fund at VivaTech 2018, TechCrunch visited the French Development Agency (AFD) – which will administer the new fund – for more details on how the new fund will work.

The 76 million dollars (or 65 million euros) will be divided into three parts, according to the head of the AFD digital mission. Christine Ha.

“There is 10 million euros ($11.7 million) for technical assistance aimed at supporting the African ecosystem… 5 million euros will be available as interest-free loans for high-potential startups in pre-seed… and… 50 million euros ($58 million) will be for equity investments in Series A to C startups,” Ha explained during a meeting in Paris.

Technical assistance will be distributed in the form of grants to accelerators, hubs, incubators and coding programs. The pre-seed loans will be issued in amounts up to $100,000 “as early financing to enable entrepreneurs to prototype, launch and experiment,” Ha said.

The $58 million in venture capital seed funding will be administered through Proparcoa development finance institution – or IFD — partly owned by AFD. The money will come “from Proparco’s balance sheet”… and part “will be invested in venture capital funds active on the continent,” Ha clarified.

Proparco already invests in funds focused on Africa such as TLcom Capital And Partech Ventures. “Proparco will take equity stakes and be a limited partner when investing in venture capital funds,” Ha said.

Startups from all African countries can apply for part of the $58 million by contacting one of the Proparco Africa offices (notably in Casablanca, Abidjan, Douala, Lagos, Nairobi and Johannesburg).

And what will AFD (and Proparco) look for in African startup candidates? “We target young and innovative companies capable of solving problems in terms of job creation, access to financial services, energy, health, education and affordable goods and services… (and) capable of expand their business on the continent,” Ha said. .

Technical assistance of $11.7 million and the loan portion of $5.8 million from the new French fund will be available from 2019. Regarding implementation, the AFD is “still examining several options… such as rely on local actors via the (French) Digital Africa platform,” Ha said.

Digital Africa – a broader French government initiative to support the African tech ecosystem – will launch a new online platform in November 2018 with resources for early-stage entrepreneurs.

This is the essence of the new French fund for Africa. This is in addition to the risk capital burden announced for the continent in less than 15 months, notably $70 for Partech VenturesTPG Growth’s $2 billion Rise Fund and 40 million dollars at TLcom Capital.

While $75 million (and those other amounts) may seem paltry compared to Silicon Valley venture capital values, it’s a lot for a startup scene that, by one rough estimate, has only attracted 400 million dollars four years ago. African tech entrepreneurs, you now have many more financing options globally, including from France.

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