The International Finance Corporation (IFC) has launched a $225 million venture capital platform to back early-stage startups in Africa, Middle East, Central Asia and Pakistan.
The fund, announced in a statement on Tuesday, will make equity and “equity-like” investments in tech startups to “grow them into scalable ventures that can attract mainstream equity and debt financing”, TechCrunch reports.
IFC is a private sector lending arm of the World Bank, and expressed interest in partnering closely with other members of the World Bank to champion for regulatory reforms, sector analyses and other changes that can grow the venture capital ecosystems in these regions.
An additional $50 million funding came from the Blended Finance Facility of the International Development Association’s Private Sector Window — a body that de-risks investments in low-income countries — and the IFC has promised to rally for even more capital from development institutions and the private sector.
The institution said it’s hoping to cut the gap made worse by a global reduction in funding as investors face various macroeconomic headwinds. Its regions of focus receive only a small part, a small percentage of the global capital funding, which in 2021 amounted to less than 2% of $643 billion of global venture capital funding.
“Support for entrepreneurship and digital transformation is essential to economic growth, job creation, and resilience,” said Makhtar Diop, IFC’s managing director.
“IFC’s Venture Capital Platform will help tech companies and entrepreneurs to expand during a time of capital shortage, creating scalable investment opportunities and backing countries’ efforts to build transformative tech ecosystems. We want to help develop homegrown innovative solutions that are not only relevant to emerging countries but can also be exported to the rest of the world,” he said.
The new adds to IFC’s Startup Catalyst Program, and will focus on investments in low-income and fragile countries to help generate a pipeline of credible early-stage companies.
Using the platform, IFC expects to invest in regions beyond major hubs like Egypt, Kenya, Nigeria, Pakistan, Senegal and South Africa. It has made direct investments in Twiga Foods, a Kenyan technology food distribution platform; TradeDepot, a B2B e-commerce startup connecting brands with retailers; and Toters, an on-demand delivery platform in Lebanon and Iraq.
