Supporting high-potential innovative start-ups

In 2017, $560 million were invested into African start-ups. While this amount has increased significantly in recent years, it is still far below investments made in the rest of the world.

Access to financing therefore remains one major obstacle for African start-ups, with less than 4% successfully able to finance themselves.

These start-ups, often created in response to unmet needs and demand in local markets, play a key role in job creation and promoting new economic models. They are thus a new and powerful development tool for Africa. The question of their financing is therefore crucial.

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Our ambition : finance start-ups that contribute to development in Africa

A double financing objective
A dedicated team

A double financing objective

A double financing objective

Proparco intends to play a catalytic role in private investment by supporting African startups, directly or through Fisea. The objective is twofold:

1/ to support venture capital funds active on the continent, set up by quality teams capable of developing the companies in which they invest. Since 2015, 4 bridge funds have been supported for an amount of nearly 20 million dollars. They could not have been created without funding from development institutions, which contributed more than 50% to the financing round.

2/ Invest directly in high-impact startups, which use technology to lower the cost of access to goods and services for local populations and thus promote their dissemination. 4 startups have been supported live since 2016, including 2 in Africa.

A dedicated team

A dedicated team

Since 2018, a division dedicated to investing in young innovative companies has been created within Proparco's Investment Department. Its ambition is to identify and finance the best venture capital funds operating in the region, which share our development objectives.

Alongside venture capital funds, Proparco will continue to invest in start-ups that have not yet achieved profitability, but with proven products and technologies that can be replicated throughout the continent. The sectors of fintech (development of financial inclusion and lower transaction costs), energy (access to solar energy), education and health will be particularly targeted.

Beyond its financing offer, Proparco is also committed to meeting the very specific needs of these young companies by offering them dedicated technical support in setting up a solid management framework capable of encouraging and welcoming their growth - whether in terms of governance, management, innovation or responsibility.

The magazine Private Sector & Development (SP&D) is a quarterly publication of Proparco's that aims to analyse and understand the mechanisms by which the private sector can contribute to the development of developing and emerging countries.

Devoting an issue of this review to venture capital and the universe of start-ups in Africa means taking an interest in a rapidly expanding market, understanding its key elements and evoking the potential negative externalities that can result from it. We wanted to give experts and passionate actors a platform from which to shaire their experiences with us.

The common thread throughout this issue is that development finance institutions (DFIs), such as Proparco, undoubtedly have a crucial role to play. For the Agence Française de Développement (AFD) Group, this requires complementary action. Thanks to AFD's prior work to set up an ecosystem conducive to the emergence of start-ups (through the creation of incubators, accelerators, etc.), Proparco will be able to, from its side, participate actively in financing these future "tech" champions in Africa.

Interactive map

This map is for illustrative purposes only and does not engage the responsibility of the AFD Group

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Kenya | Nigeria | Uganda

May 2018

DEVELOPERS FROM THE SILICON SAVANNAH

From autonomous solar energy systems to mobile payment solutions for unbanked users, technology helps solve a wide range of major development problems in sub-Saharan Africa. Across the continent, scientists, engineers and entrepreneurs are combining their technologies and knowledge to find solutions tailored to people's needs and to drive sustainable growth.