Startups to benefit from IFC’s Sh27b venture platform
The International Finance Corporation (IFC) has launched a $225 million (Sh27 billion) venture capital platform to support sprouting startups across Africa, Middle East, Central Asia and Pakistan, amid massive growth of the digital economy.
The platform is expected to help emerging startups and other small businesses in Kenya, further bolstering the country’s economic growth plan. It will also focus on investments in low-income and fragile countries and help generate a pipeline of credible early-stage companies.
IFC will make equity or equity-like investments in tech startups and help them grow into scalable ventures that can attract mainstream equity and debt financing.
“IFC’s Venture Capital Platform will help tech companies and entrepreneurs expand during a time of capital shortage, creating scalable investment opportunities and backing countries’ efforts to build transformative tech ecosystems,” said IFC’s managing director Makhtar Diop.
The capital will be invested in the early-stage companies tackling development challenges through technology innovations in climate, health care, education, agriculture, e-commerce, and other sectors.
It will target venture firms which have demonstrated early growth potential though facing global economic shocks through wars, hiked supply chain costs, pandemics, global inflation, and rise in interest rates by the developed economies.
These global shocks have lately impacted access to capital among most firms, leading to sudden closure or operation cut of some. IFC is expected to collaborate with other interested partners in the World Bank Group to strengthen venture capital ecosystems through regulatory reforms, sector analyses and other tools.
The World Bank’s arm, International Development Association (IDA), has already backed the platform with an additional $50 million (Sh6 billion) from its Blended Finance Facility.
African states like Egypt, Kenya, Nigeria, Pakistan, Senegal and South Africa have been touted as forerunners in tech startup growth. However, some of these firms have still struggled to hit their full potential.
In Kenya, some tech start-ups like Sky Garden, Kune Foods, Notify Logistics, WeFarm, have either shut down or slashed their workforce in the past four months, citing high operation costs, tough market conditions, and challenges in scaling up.
- Herald Aloo
