As one big African VC
falls, another rises

Within days of a major setback for startup funding in Africa, a massive boost was announced. At the beginning of this week, news broke that Naspers had closed down its R1.4bn SA-focused technology investment fund, Foundry. Originally a $100-million fund, it had spent only half of its available war chest on start-ups.

The existing investments will now be managed through its parent company, prosus, which is a major global investor in start-ups.

The day after the news broke, Flat6Labs, a leading seed investor in the Middle East and North Africa, announced the launch of a US$95-million Seed Fund “to nurture the growth and development of early-stage tech startups on the African continent”.

Flat6Labs has a track record of investing in promising startups in North Africa since it was founded 12 years ago, with more than $16-million invested in startups, and over $191-million raised in follow-on funding. It says it has created more than 2,500 direct jobs and 80,000 indirect jobs through its first two funds in Egypt and Tunisia.

Headquartered in Egypt, the Africa Seed Fund (ASF) will focus on three main investment territories in Africa: North Africa, West Africa, and East Africa. Flat6Labs will extend its reach into several new territories, including Nigeria, Ghana, Kenya, Morocco, and Senegal.

The ASF will be led by Ramez El-Serafy and Dina el-Shenoufy as General Partners. The fund will invest in early-stage startups that operate in the technology sector in Africa, with a focus on impactful sectors that accelerate digital inclusion through the use of information technologies. It will also focus on industries that contribute to addressing social and environmental challenges, such as HealthTech, FinTech, EdTech, GreenTech, AgriTech, and ClimateTech.

Flat6Labs says the significant influx of capital from the ASF has the potential to create more than 14,000 jobs, provide support to more than 1,200 founders, with 20% female participation, and generate revenue of more than $700-million.

The African tech ecosystem has continued to grow in 2022. According to Partech 2022 Africa Venture Capital Report, funding for the African sector increased to $6.5-billion in 2022, up from $6-billion in 2021 (https://apo-opa.info/3Th8e6Y).

Flat6Labs’ Africa Seed Program provides portfolio companies joining the program with seed funding, regional business support, access to a regional network of seasoned local mentors, as well as regulatory and logistical support to set up and grow their businesses.