Digital Africa in partnership with Proparco has launched Bridge Fund by Digital Africa, a new financial instrument to help African startups mitigate the economic impact of the Covid-19 pandemic.

Promoted by Digital Africa and deployed by Proparco, the fund is designed as an innovative and effective response to certain specific challenges confronting young innovative growing companies, leveraging digital technology to support structuring sectors of the African economy.

With an amount of €5m, this fund looks like the French Tech Bridge, with the aim of offering a kind of bridging loan, over a maximum period of 24 months, to companies whose fundraising process has been cancelled or delayed due to the global economic crisis and the contraction of the investment market.

Tickets will be comprised between €200,000 to €600,000 and co-financed by recognised investors to create a leverage effect and multiply the impact of the fund.

Tomi Davies, CIO at Greentec Capital, founding President of the African Business Angel Network (ABAN) and official Patron of the project, said: “With this fund, Digital Africa demonstrates clear support for our most promising digital ventures on the continent by providing investors leverage on their existing investments.”

“I encourage early stage investors and tech startups to consider this bridge between funding rounds alternative.”

Digital Africa’s CEO Stephan-Eloïse Gras, said: “There is no doubt about the role of technological innovations, as they can potentially transform all sectors of activity – which makes digital entrepreneurs one of the keys to Africa’s economic recovery and makes the creation of this bridge fund even more relevant.”

The selected projects will thus have to put technology at the service of other structuring sectors of the African economy, such as agriculture and agricultural processing, access to and distribution of energy, education, health, financial inclusion, logistics, essential collective services such as water or waste management, and green mobility. 

Companies keen to apply must also have been in business at least for the last 18 months, generate 75% of their turnover of at least €200,000 on the continent or have at least half of their teams working there. 

“In addition, the targeted companies must have already demonstrated that their business model works and have successfully gone through a first round of fundraising. The approach we have chosen therefore really consists in supporting growth, or, in other terms, scaling up projects,” explained Johann Choux, Head of Venture Capital Investments at Proparco.

Digital Africa and Proparco have been working on a simplified and rapid process, both for reviewing applications, which will take no more than 8 weeks, and for formalizing contracts and allocating funds.

The first step is a questionnaire to enable interested companies to check whether they are eligible or not, which is available on the Digital Africa’s website.

Investment structures interested in this project can already contact Digital Africa or Proparco to explore partnership opportunities.