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Cathay Innovation and Africinvest Are Launching a $168 Million Fund for African Startups

Two investor bodies- Tunisia-based Africinvest and venture capital firm Cathay Innovation –are combining forces to build a $168 million fund for startups on the African continent. Their intention to stake new money on the continent’s emerging tech ventures was made public on Wednesday.

Africinvest, which has a history of supporting businesses from across Africa’s commercial landscape, currently manages an asset base worth over $1.5 billion. This includes interests in traditional brick-and-mortar companies. Cathay Innovation, an arm of Paris-based Cathay Capital, has a presence in Europe, North America, and the Middle East.

It does appear that they’re merging forces to complement each other’s strengths, as they both look to expand their portfolio. Their new joint project- the Cathay Africinvest innovation fund –should see Cathay make an entrance into the booming African startup ecosystem, an opportunity that lies beyond the location of their present concerns. It will also allow Africinvest to diversify its investments to include tech ventures disrupting banking, agriculture and other industries.

Information available in the media as at the time of this article’s writing suggests that the fund will be targeting series A to C investments in technology companies. Techcrunch quotes the fund’s co-founder, Dennis Barrier, as saying that they’re looking out for startups in “fintech, logistics, AI, agritech, and education.”

As for the possible geographical spread of its investments, it appears they’re expecting a strong representation from cities in which Africinvest already has a presence. That will include Lagos, Nigeria’s commercial capital and the chief center of the country’s billion-dollar tech ecosystem.  A significant showing from North Africa is likely as well, with Algiers, Cairo, and Casablanca being among the ten cities in which Africinvest has offices.

Beyond the obvious gains that lie ahead of these investors, there could also be benefits for the ventures which secure funding from them. They could scale up more rapidly, employ extra staff, and do more impactful work over a wider area. In the end, the multiplier effect could help strengthen not just the tech ecosystem, but the sectors immediately adjoining it.

Startups should also be receiving technical support from the Cathay-Africinvest team, as well as their network of partners across the continent and beyond. While local realities may differ from what obtains in Cathay’s principal regions of concern, there’s much to be learned from the similarities that do exist between them. The wealth of knowledge to be reaped from these networks could help beneficiary startups immensely.

It’s certainly not a surprise that interest in African tech startups has exploded over the past few years. The sector has shown strong growth within the period and demonstrated great potential for more. One report says startups on the continent attracted $560 million in venture funding in 2017. That was a large improvement from the $366 million raised the year before.

Meanwhile, Nigeria has gotten a large share of the funding flowing into Africa’s tech ventures. Last year, its startups raised $178 million from investors. This indicates increasing confidence in the promise shown by these companies, and their sustained profitability amongst other things.

The coming of the Cathay Africinvest Innovation Capital to the scene brings the number of Africa-focused Venture Capital firms to 52, according to Crunchbase’s research. That’s also a marker of the positive view being taken by the global investor community of the opportunities available in Africa’s tech space.

Featured image source: Moneycontrol

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Ikenna Nwachukwu

Ikenna Nwachukwu holds a bachelor's degree in Economics from the University of Nigeria, Nsukka. He loves to look at the world through multiple lenses- economic, political, religious and philosophical- and to write about what he observes in a witty, yet reflective style.

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