Africa Finance Corporation Invests in Early-Stage Venture Capital
Africa Finance Corporation (AFC), a leading development bank managing over $19 billion in assets, has committed $40 million to Future Africa and LightRock Africa. The latter is a London-based impact investment firm with stakes in notable companies like Monypoint and M-Copa.
Growth Initiative within AFC’s Technology Division
This investment is part of a broader initiative, a $100 million fund established within AFC’s Telecommunications and Technology Division aimed at fostering growth in African technology through venture capital managers. Historically, funding from development finance institutions (DFIs) like AFC has been vital for startups on the continent. However, projections indicate that by 2025, DFI contributions are expected to decline to 27% of total funding commitments, as reported by the African Private Capital Association.
Pioneering Change in African Technology Investment
The newly established $100 million fund has the potential to stimulate a resurgence of institutional investment in African technology. By specifically targeting technology-focused fund managers, this initiative represents about 3% of the total startup funding in Africa from the previous year, indicating a strategic move to bolster the sector.
Venture Capital Funding Trends in Africa
This investment comes at a critical juncture, as venture capital funding in Africa has witnessed its first decline in four years. In just six final closes during 2025, Africa-focused fund managers secured only $107 million, reflecting an alarming 87% year-on-year drop in funding, according to the African Private Capital Association.
AFC’s Commitment to Technology Ventures
During a recent call with TechCabal, Begna Ghebreyesus, AFC’s head of heavy industry, communications, and technology, revealed that the bank’s initial commitments include $25 million to LightRock and $15 million to Future Africa, with plans to allocate an additional $60 million to further fund managers currently under evaluation. Founded in December 2007, AFC has traditionally focused on infrastructure investments across sectors such as oil and gas, mining, and telecommunications. This initiative marks a significant shift towards more proactive engagement in African technology, previously limited to late-stage investments in established firms.
Building a Robust Fund of Funds Program
AFC’s $100 million fund of funds program is strategically designed to address the decreasing levels of investment in African technology. In 2025, African startups raised $3.4 billion, with the majority of that funding concentrated in four key markets: Egypt, Kenya, Nigeria, and South Africa, which collectively accounted for 82% of total investment on the continent.
AFC Seeks Broader Investment Collaboration
This venture is advantageous not only for AFC but also for the recipient funds, which can leverage the substantial capital to enhance their fundraising activities. AFC covers nearly the entire African venture capital spectrum, from pre-seed to growth stages. Ghebreyesus emphasized that the funding structure provides a robust deal pipeline for late-stage investments, a strategy long favored by the bank.
AFC’s Ambition to Attract International Capital
The downward trend in local high-tech venture capital financing is attributed to insufficient contributions from local pension funds and growing caution among international limited partners (LPs) regarding their exposure to African technology. European venture investors, who historically provided about 70% of commitments between 2022 and 2024, drastically reduced their share to just 21% in 2025.
Strategic Framework for Institutional Investments
AFC’s entrance into the tech venture capital space underscores its commitment to leveraging an African-centric balance sheet, which is accountable to local shareholders and mainly financed through African bond markets. Ghebreyesus shared the bank’s strategic goal to utilize this commitment to catalyze an additional $300 million to $500 million in co-investments from U.S. and European institutions seeking exposure to Africa, while lacking the capability to identify suitable fund managers on the ground.
Positioning for Future Investment Success
By facilitating investments alongside AFC, the bank aims to boost its standing as a trustworthy institutional partner, an edge that smaller African VCs struggle to provide independently. If successful, this strategy could make AFC’s $100 million investment a pivotal catalyst for injecting an estimated $300 million into African tech venture capital at a moment when the sector is in dire need of support.
