In order to support venture capital ecosystems in Africa, the Middle East, Central Asia, and Pakistan and invest in early-stage businesses tackling development issues through technological innovations in the climate, healthcare, education, agriculture, e-commerce, and other fields, IFC has launched a new platform worth US $225 million.
Despite having huge development potential, these areas received less than 2% of the US $643 billion in worldwide venture capital financing in 2021. The digital economy, for instance, has the potential to increase Africa’s gross domestic product (GDP) by US$712 billion by the year 2050.
The new platform from IFC seeks to support the regions’ emerging venture capital markets, which have shown early growth potential but are currently confronted by difficult global economic conditions. IFC will invest in tech startups with equity or investments that have the potential to become equity, assisting them in becoming scalable businesses that can secure traditional equity and debt financing. Through the use of sector analyses, regulatory changes, and other tools, IFC will also use the platform to work with other teams in the World Bank Group to build and support venture capital ecosystems.
The platform will expand upon IFC’s investments and initiatives, such as the IFC Startup Catalyst Programme, that aim to create tech ecosystems in Pakistan, the Middle East, Africa, and Central Asia. IFC has invested in businesses such as Twiga Foods, a technology-based food distribution platform based in Kenya; TradeDepot, an e-commerce startup that connects global brands with African retailers; and Toters, a top on-demand delivery platform in Lebanon and Iraq.
“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 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”.
The platform will also receive an additional US $50 million from the Private Sector Window of the International Development Association’s Blended Finance Facility, which lowers the risk of investments in developing nations. To support businesspeople and tech firms in those nations, IFC will also raise money from private investors and other development organizations.
