Two local startups set to benefit from Sh4.71b EIB funding

Thursday, January 11th, 2024 02:00 | By
EIB East Africa regional head Edward Claessen. PHOTO/Print
EIB East Africa regional head Edward Claessen. PHOTO/Print

Two Kenyan startups, Shamba Pride and Poa Internet, are among firms set to benefit from $30 million (Sh4.71 billion) equity investment offered by European Investment Bank (EIB) across Africa.

The capital will be channelled through Seedstars Africa Ventures I, a venture capital fund present in more than 25 countries, to support their growth, expansion, job creation, and improved product portfolio.

The Fund will mainly target companies in the digital ecosystem, particularly those addressing basic needs such as education, healthcare, and utilities or enhancing goods, services, and efficiency.

Potential investors

“By supporting these firms, we help to stimulate the creation of an ecosystem here in Kenya to become successful. We take more risks as investors. By taking more of the risk and absorbing some of the processes, it makes it less risky for other potential investors coming to the Fund,” EIB East Africa regional head Edward Claessen said in Nairobi.

“What EIB likes about the Fund is that it supports young Kenyan businesses, supports them to grow, recruit talented people, and to expand locally and the wider region,” he added during the announcement of the investment funding.

The $30 million EIB Global investment is backed by the EU through $20 million from the ACP Trust Fund and $10 million from the Boost Africa programme.

This investment comes at a time when most startups in Kenya are facing massive shutdowns due to lack of funding, stiff competition, and rising costs of energy and taxes that left them battling huge operation costs.

The Seedstars Africa Ventures I expect to reach a first close early this year but has already completed four transactions, among them, in Poa Internet and Shamba Pride in Kenya. The other two transactions are in Nigeria-based Beacon Power Services and Bizao in Ivory Coast and Senegal.

Shamba Pride is an agro-retail digital shop, while Poa Internet offers broadband internet in Nairobi, Mombasa, and Nakuru. The Fund leads investment rounds to facilitate syndication and provides strong operational support that is critically lacking in the regional venture capital space.

“Our commitment to Seedstars Africa Ventures is part of our strategy to offer a range of diversified alternative assets to our investors and allow them to participate in Africa’s growth story,” said Stéphanie Casciola, CEO of LBO France, one of the Fund’s partner.

Global pressures since the Covid-19 outbreak have made it more difficult for companies to access finance, in particular at the earliest stages of developing the business. This has limited the expansion of innovative technology companies.

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