The health and then the economic crisis, due to the Covid-19 profoundly impact the startup ecosystem in Africa. Difficulties are significant, and today the investment market contraction is real. Digital Africa and Proparco launched a custom-built tool to support digital African startups' resilience to answer this problem: Bridge Fund by Digital Africa. "The agritech sector suffered during the pandemic, the e-health, e-learning are growing... All need funding to develop their activities," Tomi DAVIES, Chief Investment Officer at Greentec Capital, recognized investor in the African tech ecosystem for 20 years, and the official Patron of the project explained.
For those startups, Bridge Fund by Digital Africa is a real asset and will be really useful.
A bridge loan to support companies between funding rounds
As Stéphan-Éloïse GRAS, executive director of Digital Africa, explains, "this new fund must allow economic stakeholders to pursue their development between two fundraisings." Fundraisings were delayed, postponed, or even canceled due to the crisis. "Those periods can be dangerous for companies, especially for the ones working with material goods, exchanges, and which have huge challenges facing the Covid and the decrease of investments," Tomi DAVIES said. With a 5 million euros budget, Bridge Fund hopes to help "young companies that put technology at the service of other structuring sectors of the African economy" through a bridging loan, with attractive conditions and for a period of up to 24 months.
A tool to help growth
Bridge Fund by Digital Africa is a tool designed to accelerate the growth of startups, and responds to the funding difficulties heightened by the COVID-19 crisis.
Companies keen to apply must 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. The tickets, ranging from €200,000 to €600,000, will have to be co-financed by investors already active on the continent. "I believe in this fund because I don't think investors should be like "you must do this, or that." Here we focus on existing startups, and we help them. And I think it's essential to build a stronger Africa", Tomi DAVIES explained.
"There is no doubt about the role of technological innovations, as they can potentially transform all sectors of activity"
"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 said.
Being fully aware of the difficulties confronting high-potential startups, Digital Africa and Proparco have been working on a simplified and rapid process to reviewing applications, taking no more than eight weeks, and formalizing contracts allocating funds.
