FeaturedNews

Tech A specific tool to support African startups resilience

Digital Africa and Proparco launched on the 5th of November, in Paris, Bridge Fund, by Digital Africa, a tool to support the African digital startups’ resilience to face the investment market contraction. 

 

 

By Bilkiss Mentari, from Paris

 

 

African startups are innovative, for sure. Resilient, not always, or not enough. And the Covid-19 crisis highlighted the strengths and weaknesses of those startups. Available to young innovative African companies is now Bridge Fund by Digital Africa, a new financial instrument to help them mitigate the economic impact of the Covid-19 pandemic. Promoted by Digital Africa and deployed by Proparco, a subsidiary of the French Development Agency (AFD) dedicated to the private sector.

 

“This new “bridge finance” fund should enable digital entrepreneurs to continue their development between two rounds of fundraising”

 

This fund is designed as an innovative and effective response to certain specific challenges confronting young innovative growing companies, leveraging digital technology to support the African economy’s structuring sectors. With an amount of €5 million, this fund looks like the French Tech Bridge, intending to offer a kind of bridging loan, over a maximum period of 24 months, to companies whose fundraising process has been cancelled or delayed due to the global economic crisis and the contraction of the investment market.

 

“This new “bridge finance” fund should enable digital entrepreneurs to continue their development between two rounds of fundraising,” Digital Africa said in a press release.

 

 

In concrete terms, the selected companies will be able to receive a loan similar to a bridging loan, with attractive conditions and for a period of up to 24 months. The tickets, ranging from €200,000 to €600,000, will have to be co-financed by investors already active on the continent. *

 

“There is no doubt about the role of technological innovations, as they can potentially transform all sectors of activity which makes digital entrepreneurs one of the keys to Africa’s economic recovery and makes the creation of this bridge fund even more relevant”

 

“There is no doubt about the role of technological innovations, as they can potentially transform all sectors of activity which makes digital entrepreneurs one of the keys to Africa’s economic recovery and makes the creation of this bridge fund even more relevant,” Stéphan-Eloïse Gras, director of Digital Africa said.

 

The selected projects will thus have to put technology at the service of other structuring sectors of the African economy, such as agriculture and agricultural processing, access to and distribution of energy, education, health, financial inclusion, logistics, essential collective services such as water or waste management, and green mobility.

 

“The targeted companies must have already demonstrated that their business model works and have successfully gone through a first round of fundraising”

 

Companies keen to apply must also have been in business for at least the last 18 months, generate 75% of their turnover of at least €200,000 on the continent or have at least half of their teams working there. “In addition, the targeted companies must have already demonstrated that their business model works and have successfully gone through a first round of fundraising. Therefore, the approach we have chosen really consists of supporting growth, or, in other terms, scaling up projects,” explained Johann Choux, Head of Venture Capital Investments at Proparco, during the presentation.

 

As indicated by Tomi Davies, Chief Investment Officer at Greentec Capital, founding President of the African Business Angel Network (ABAN) and official Patron of the project: “With this fund, Digital Africa demonstrates clear support for our most promising digital ventures on the continent by providing investors leverage on their existing investments. I encourage early stage investors and tech startups to consider this bridge between funding rounds alternative.”

 

 

As a reminder, Digital Africa was launched in 2018 with the mission to equip African tech entrepreneurs with capabilities to design and scale-up ground-breaking innovations for the real economy.

 

To be noted : Being fully aware of the difficulties confronting high-potential startups, Digital Africa and Proparco have been working on a simplified and rapid process, both for reviewing applications, taking no more than 8 weeks, and formalizing contracts and allocating funds.

 

The first step is a questionnaire to enable interested companies to check whether they are eligible or not, which is available on the website: https://bridge.digital-africa.co

 

 

Investment structures interested in this project can already contact Digital Africa or Proparco to explore partnership opportunities.

 

Ce message est également disponible en : FrenchArabic