The Digital Africa seed fund off to a promising start, offers customized support for African startups
The Digital Africa seed fund was launched in December 2019, with a three-year disbursement period. The crucial period is at the start, where African start-ups are faced with a vast number of tasks which will determine whether it’s make or break.
“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, and yet it attracts few investors”, says Jean-Pierre Barral, Director of AFD’s Energy and Digital Transitions Department. About 87% of African start-ups do not have access to any financing.
Six months in, a third of the budget has been invested to finance programs and the follow-up of the first eligible digital start-ups. “We have been in touch with 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 20 of them.” To date, these candidates have benefited from some 300 hours of expertise on strategic, financial and operational aspects. Five of them have also obtained financing ranging between €20,000 and €50,000.
The multi-dimensional formula of providing liquidity and experts who act as co-founders of the company, has attracted numerous start-ups at the outset. “We are the ‘brain back-up’ – specialists who help promising businesses grow”, says Maxime Bayen, a venture builder at GreenTec, who shares his expertise with six companies. “Some will manage to scale up and attract investors.”
In addition to directly supporting start-ups, the Digital Africa seed fund also seeks to develop 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.”
“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 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 adapt to the needs of start-ups and the companies and services to which they’re connected.
“When my company was hit hard by the epidemic, I was able to benefit from an interest-free loan of €25,000, which allowed me to stay in business”, says Alvine Choupo, co-founder of VuSur, a Cameroonian start-up that promotes and facilitates on-line buying of African and foreign products.
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.”
Continuing until 2022, this fund fulfills the French President’s promise to support African start-ups for the assistance they can provide to local communities in terms of facilitating access to basic services, such as information, training, work and education.
COLIBA, Ivorian start-up provides technology for plastic waste recycling via a web, mobile and text message application. Yaya Kone, co-founder of COLIBA says: “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. Awura Abena Amponash, Director and co-founder of Sumundi says: “The development of our business has been accelerated by the technical assistance we have received 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 Sumundi together. It’s reassuring and rewarding to be surrounded by professionals and to be able to ask them any questions we might have.”