A Columbia venture capital firm wants to get westerners to open their eyes to the potential of African tech companies.
AfriGloCal plans to raise an initial fund of $5 million to give 30 to 35 companies around $150,000 in seed or pre-seed funding. General Partner Mope Abudu hopes to close the fund within the next six months.
Abudu has raised a little more than $1 million so far, and the VC — Abudu's first — already has 11 portfolio companies.
AfriGloCal's portfolio companies come from Abudu's startup accelerator Knight Ventures and are all based in West Africa. The companies are mostly in the fintech digital infrastructure industries, such as Aladdin, a digital Nigerian bank. AfriGloCal also hopes to target women founders who more often struggle with receiving access to funding, compared to other entrepreneurs.
“When you're at the table, you bring a different perspective. You're bringing a lot of quality to the table and the strength of those contributions really make the business better,” Abudu said.
She has seen firsthand the changes that have swept through the African finance industry. When Abudu began working in the industry as a regulator in the early 2000s, almost every transaction was done in cash with few banking opportunities for traditional debit cards and ATMs. Today, fintech is a booming industry with technology becoming more integrated into daily life, especially in countries like Nigeria and Kenya that are creating strong tech economies.
Between 2020 and 2021, the number of tech startups in Africa tripled, according to McKinsey & Co. Half of those startups are fintechs. In 2021, Nigeria added three unicorns, or tech companies with an evaluation of more than $1 billion, and the Nigerian tech sector as a whole raised $1.37 billion, according to Nigerian newspaper The Guardian.
Much of the continent's early fintech growth stemmed from the need for the African diaspora in Europe and America to send money back to their families. Many of the commercial banks were not set up well for remittances, and many Africans in rural areas did not have access to traditional banking systems, making it difficult for them to participate in the wider economy.
AfriGloCal plans to focus on startups that have a stronger business-to-business structure instead of cash transfers. Two of its existing portfolio companies, Farmz2u and Mavuno work to help small farmers. Farmz2u helps small farmers find a marketplace for produce by providing advice on what to grow and how. Mavuno uses satellite imagery to help increase the crop yield of small farms.
Abudu hopes to have companies that address the problems of local African communities, but can also scale to other regions of the world. Along with fintech, there is a large interest in medical technology, with more applications focused on preventative care, Abudu said.
“That is really where it becomes more impactful, becomes more value-added,” Abudu said. “In the scope of its activities, it's more than just transferring money.”
