Why international DFIs need to influence the investment efforts of African startups • TechCrunch

Even as VC funding As the world dries up, development finance institutions (DFIs) are looking to African startups to deploy their dry powder.

British International Investment (BII) DFI from the United Kingdom recently told TechCrunch that in By the end of 2026, it will deploy $500 million to startups, and half of this money will be allocated to African technology companies. In addition to supporting VC funds in the region, the firm aims to make more direct equity investments in startups, adding to the four African companies it invested in last year.

BII, formerly the Commonwealth Development Corporation, is not alone: ​​the World Bank, the International Finance Corporation (IFC) and the Netherlands Entrepreneurial Bank (FMO) have each invested in more than 10 startups in the past four years. IFC recently launched a $225 million fund to support early stage startups in Africa, Central Asia, the Middle East and Pakistan.

Often associated with countries that colonized large parts of the continent and still have financial, social and historical ties to countries in the region, these funded startups complement and grow with investment from VC funds and other institutional investors.

Dario Giuliani, founder and director of research firm BritBridges, said “development finance” is a paradigm shift in which private enterprise is viewed as a vehicle for social and economic development.

BII’s decision follows plans to redouble its efforts and invest $6 billion in Africa over five years, including $100 million in startups in Egypt. The firm has invested in eight African startups since 2020.

But while investors around the world prefer to invest only in safe bets, what makes these firms invest in Africa? They seem to be attracted to technology that enables broader socio-economic development because it provides a convenient and efficient way to create economic impact.

Investing in technology to achieve development goals

Usually by deploying capital from national or international development funds, DFIs support development and private sector projects in small industrialized economies that create jobs and sustain economic growth. In line with these missions, these organizations seek to support technology startups that can make an impact—for example, technology that provides and increases access to financial services, food, and energy for marginalized populations.

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