The African Development Bank injects $10.5 million into the Tide Africa Fund to develop startups in Africa | African Development Bank

Capital investment in the TIDE Africa fund will support the venture capital finance value chain, especially pre-seed and seed stage startups

financing

• Date of approval : January 25, 2023
• Project Name: TLCOM’s Tide Africa II fund
• Quantity : Equity investment of US$10.5 million from the African Development Bank

Goals

• Support the venture capital finance value chain, especially pre-seed and early-stage startups (a segment that will benefit from 75% of the fund’s assets).

Components

• Provide long-term equity financing through preferred stock to startups at all growth stages, but especially starting with seed capital.

Target area and population

The fund will cover countries in sub-Saharan Africa (starting with Nigeria and Kenya), as well as South Africa and Egypt. The priority given to these countries is justified by the fact that these markets are the most technologically advanced on the continent and thus offer enormous opportunities from the start-up phase to the growth phase.

Expected results

• TIDE II will create approximately 4,384 jobs at the sub-project level and generate $904 million in tax revenue for African governments over the period 2023-2032.
• The fund is also expected to deliver additional benefits to households, such as better access to goods and services in these sectors, with potential positive impacts on consumers’ quality of life.
• The number of additional jobs that should go to women at the level of the beneficiary companies is estimated at 1,438, which corresponds to 32.8% of the total additional job creation. 9 of the 23 companies in the indicative project pipeline are led and/or owned by women. This represents 37% of the total value of the reserve, while 17 of the 23 companies are run by young people (under the age of 35), representing 86% of the total value of the reserve.

Beneficiaries

The beneficiary of the equity investment is the Tide Africa Fund, managed by TLcom Capital LLP, a UK incorporated limited liability company.

Context

Africa is home to a fast-growing ‘tech market’, with many startups operating as fintech companies or offering technology-based solutions to other ‘real’ sectors. The growing presence of incubators and accelerators, significant market opportunities to generate efficiency gains in various sectors thanks to technologies, as well as a strong smartphone penetration (70%) are just as many factors contributing to the emergence of a dynamic ecosystem that gives birth to thousands of young companies every year (startups). As the ecosystem matures, opportunities increase and the need for funding grows. In addition, access to seed capital is still insufficient in most of the continent, particularly for tickets worth between $500,000 and $1 million. Lack of access to capital, especially in the start-up phase, has a negative impact on the growth potential of start-ups. In addition, the number of local managers with the capital and business development capabilities needed to provide the necessary support in an emerging ecosystem is still limited. It is therefore possible to strongly develop the ecosystem, just as it is necessary to support venture capital players such as TLCOM, who have a proven track record and have demonstrated their ability to reach low-end technology companies. Investing in venture capital funds like Tide Africa II will support more companies that positively impact people’s lives and drive optimization and growth for the benefit of consumers, suppliers and markets.