Digital Africa Reinvents Business Model To Support 200 Tech Entrepreneurs

Digital Africa, a €130 million pan-African, European and French public-funded organisation, has reinvented its business model to support the growth of about 200 African tech entrepreneurs.

Chief Executive Officer (CEO), Digital Africa, Stéphan-Eloise Gras said at a virtual media roundtable on Tuesday that the organisation was committed to boosting African start-ups.

She said that the organisation had published a white paper entitled ‘Supporting Made-in-Africa Digital Innovations’.

Gras said that, as part of the white paper,  Digital Africa released an updated roadmap for 2022-2025 together with a refreshed set of objectives, with the ambition to support 200 high-impact African start-ups.

She said that to achieve the objective, the white paper clearly outlined a set of renewed objectives and 12 programmes organised in three focus areas.

According to her, the focus areas are equipping high-impact and digitally-enabled start-ups,  sourcing African and global finance to scale up projects, and developing research and policy recommendations in support of made-in-Africa digital innovations.

She said that building on recent successes including its Bridge Fund, Digital Africa was looking to move away from its initial non-profit model with a refreshed governance structure, a new business model and the ambition to get closer to the private sector.

The News Agency of Nigeria reports that as part of its white paper, Digital Africa also released an updated roadmap for 2022-2025 New Business Model and Governance Structure.

Gras said that after three years of existence, Digital Africa was reinventing its model to support the growth of its activities and serve the needs of African tech entrepreneurs better.

According to her, Digital Africa is looking at joining forces with Proparco (an investment arm of the Agence Française de Développement – AFD), to bring additional expertise to its existing investment programmes.

"Digital Africa would be positioned as the continuum to Proparco, focusing on early-stage start-ups,"

"After three years of existence, we are more than ever convinced that made-in-Africa technology is key for more inclusive and sustainable growth,"

"This is exactly why our goal is to boost African start-ups and tech ecosystems,"

"The best way to do so is to reinvent our model, become a public-private entity guided by strategic committee, with a diversified business model and extended capabilities,’’ she said.

She added that the objective would be for Digital Africa to be able to deploy direct seed financing capabilities for high-potential start-ups across the continent.

Gras said that with the unique model, Digital Africa would have the potential to become a one-stop-shop for the African tech scene, acting like a super-aggregator of data, policy, knowledge, capabilities and funding opportunities.

She said that as part of the partnership model,  a strategic committee would be deployed, bringing together ‘doers’ from key African tech ecosystems to guide Digital Africa’s actions.

Gras said that a call for candidates would be launched on March 1 with the objective to better reflect the diversity of African tech ecosystems from geographical and skill perspectives.

She said that it would bring together entrepreneurs, investors, training and research organisations, incubators and innovation policy experts from key tech ecosystems across Africa.

She said the desire to address African pressing issues led to the launch of  Bridge Fund, a €5 million fund,  deployed by Proparco to address both short-term and long-term financing challenges for African start-ups.

Gras said that it aimed to support African start-ups impacted by the COVID-19 crisis and those in their seed phase or between two fundraising rounds, by giving them access to venture debt, a form of financing currently lacking across Africa.

She said that 87 percent of African start-ups did not have access to any financing, and only 20 percent of Small and Medium  Enterprises (SMEs)  had access to bank loans.

According to her, this is in contrast to the fact that Africa is the continent with the highest number of investors, and where SMEs generate 90 percent of formal jobs.

She said that in a few months, over 230 start-ups applied from across 40 countries in Africa, and €3.4 million out of the fund’s €5 million budget had already been allocated.

Gras said that  Bridge Fund was designed to provide responsiveness to African start-ups’ needs in the time of a global pandemic and beyond.

"Our intuition is that more can be done to address the funding gap, especially with debt mechanisms.”

She said that there was an opportunity for Digital Africa and its European partners to scale up and accelerate made-in-African technology.

Chief Executive Officer of Proparco, Grégory Clemente, said: “Nearly a year and a half after its launch, the success of the Bridge Fund confirms that it concretely meets the needs of entrepreneurs on the African continent.”

Clemente said that Bridge Fund was a tool for accelerating the growth of start-ups and responding to the increased financing difficulties linked to the COVID-19 crisis.

He said that funding of a large number of start-ups in a short time was made possible by effective processing by Digital Africa and Proparco, targeting high-potential start-ups.

He said that the start-ups were at least 18 months old and had already received funding from an investor or a recognised structure.