Seedstars Africa Ventures has received a $30 Million Equity Investment from the European Investment Bank (E1B) Global. As a Venture Capital Fund, Seedstars Africa Ventures focuses on investing in young companies that have successfully developed and can effectively market their products to consumers. These companies typically exhibit a proven product-market fit. The fund has revealed that it has helped its portfolio companies increase their revenue 3 times. Some of the fund’s portfolio companies in Kenya include Poa internet and Shamba pride.
The fund strategically invests between $250,000 and $2 million, with subsequent investments of up to $5 million. By primarily dealing with Seed+ or Series A companies, the fund engages with enterprises that already have products available to consumers.
The $30 million Equity investment from EIB Global can help further expand its investments. The fund concentrates on companies that develop and leverage digital technologies. These are especially those addressing fundamental needs such as education, healthcare, water, and social services.
“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. We are proud of the success of Boost Africa and the ACP Trust Fund.”
Why Seedstars Africa
Seedstars Africa Ventures was established with a three-fold objective:
- To address the low amount raised by startups in Africa.
- To redirect funding beyond the four dominant ecosystems of Kenya, Nigeria, South Africa, and Egypt.
- To provide more extensive operational and business support to startups.
In light of these objectives, the fund aims to diversify its focus beyond traditional startups and markets, channeling investments into overlooked sectors. It also seeks to elevate the average investment in startups in Africa, which currently stands at $40 million.
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.”
More than Just Capital Injection
Seedstars not only injects capital into these companies but also actively participates on their boards, setting terms to facilitate growth. The fund acquires a significant minority stake, ranging from 10% to 30%, while emphasizing that it does not take control like private equity firms. Seedstars aids companies in strategy formulation, decision-making, marketing, staff recruitment, business partnerships, government relations, and adherence to ESG goals.
With the infusion of $30 million from the EIB, Seedstars wants to create jobs both directly and indirectly. Currently, its portfolio companies account for 2,000 jobs. This number expected to soar to 10,000 with this new injection of capital. EIB reiterated its commitment to supporting African startups through this initiative. It’s allocating $10 million of the $30 million investment to a Junior Tranche, signifying a willingness to take on more risk for impactful outcomes.
