Digital Africa: Seed Funds for Start-ups

As part of its "shared innovation" series, AFD highlights innovative programs that have been created, developed or encouraged in its partner countries.

Six partners with expertise in supporting innovative companies have been appointed to manage the Seed Fund by Digital Africa, which AFD launched one year ago. Despite the health crisis, the first start-ups have started to emerge.

Further reading: “Shared Innovation” - the Series

AFD launched the Seed Fund by Digital Africa as part of the Digital Africa initiative in 2019. The Seed Fund relies on six partners that manage financing, professionalization and skill-building programs to help in the development of innovative African businesses.

The I&P Acceleration Technologies program, for example, offers €100,000 in funding in the form of a repayable advance. The financing helped the Malagasy start-up Jiro-Vé expand the marketing of its solar energy kit, which uses a prepaid, digital billing system. Set up in rural areas, this project already has 55,000 subscribers and 72 financially independent franchises.

Giving Start-ups a Boost

"Through the I&P Acceleration Technologies program, we aim to support and finance digital start-ups that offer real solutions to the problems facing Africans, much like the company Jiro-Vé, which uses technology to provide access to energy and electricity," says Julio Mupemba, the program's coordinator.

And the results are visible. "For Jiro-Vé customers, recharging their external battery at one of our solar power terminals costs 0.02 euro cents less than buying a candle,” says Jiro-Ve co-founder Rick Stamhuis. “These installations provide everyone with access to renewable energy, which has both economic and environmental benefits.”

In Western Africa, I&P works with Mercy Corps, another operator managing the Seed Fund by Digital Africa. Together they support and finance Teliman, the first ride-hailing motorcycle taxi platform in Bamako, Mali. Run by Hawa Traoré, this Malian start-up offers citizens a fast, inexpensive and safe mode of transportation. It also offers attractive working conditions to its drivers, including the possibility of a stable income and ownership access through a rent-to-own option for their motorcycles.

To this day, Teliman works with 120 drivers who have taken more than 60,000 fares. This start-up also supports female employment to help women gain financial independence.

A network of African Business Angels

The Pan-African non-profit organization, ABAN (African Business Angel Network) supports the development of early stage investor networks across the continent. It will soon launch a Catalyst fund through the support of the Seed Fund. Business angels and the hubs of the Afrilabs network will select, finance and coach the fund's start-ups.

Fledgling entrepreneurs also depend on innovative entrepreneurship support structures. Two of the fund's partners, Afrilabs and Afric'Innov are especially active in this field. Their role is to strengthen the many incubators, nurseries and other structure's supporting entrepreneurship.

To that end, Afric'Innov recently created a label that highlights the quality of the infrastructures, organization and support resources of these SAEI. Up until now, this label has identified five entrepreneur support structures, including La Fabrique, in Burkina Faso, and Etrilabs, a Beninese incubator that works to promote entrepreneurship culture.

Another initiative involves coaching and provides €15,000 in financial support to 17 hubs selected for the Afrilabs network to develop start-up support activities.

Adapting to the Health Crisis

To continue with their activities amidst the Covid-19 pandemic, the partners of the Seed Fund by Digital Africa have adapted to the situation. Based in Lagos, Afrilabs has digitalized its skills building program for easier access. GreenTec surpassed the initial goal of reviewing 800 project proposals.

Some start-ups have proven their resilience by offering models that adapt to the logistic restrictions imposed by the crisis, particularly for those who no longer have access to traditional food markets, and whose buying power has shrunk.

By making prices more affordable, Price Pally has developed a platform that allows its Nigerian customers to buy food products in bulk. This start-up's revenue saw a monthly increase of 15% in just a few months.

Surely enough to encourage other start-ups.