New Backer for African Startups: AFC Commits $100 Million to Venture Capital

The Africa Finance Corporation (AFC), a $19 billion development finance institution, is making a significant pivot into early-stage technology investing. After nearly two decades of focusing on infrastructure projects like bridges and subsea cables, the corporation has earmarked $100 million for African venture capital.

This move comes as funding from traditional DFI sources declines - in 2025, DFIs accounted for just 27% of total commitments to Africa-focused fund managers. This represents a substantial drop from previous years and highlights the need for new investment models on the continent.

The first beneficiaries of this new strategy are Future Africa (led by tech founder Iyin Aboyeji) and LightRock Africa, which will receive $15 million and $25 million respectively as anchor commitments. These investments mark the beginning of a broader fund-of-funds program aimed at supporting early-stage African startups.

From Infrastructure to Digital Services

The shift reflects AFC’s evolving view of what makes economies competitive - recognizing that digital services like fintech, e-commerce, and e-health are increasingly critical drivers of growth. Begna Gebreyes, head of AFC’s technology division, explained this strategic rationale:

“We realized that investing in these digital services would not only drive usage of the infrastructure we’ve already financed but also prime the pump for future development - creating a virtuous cycle where digital innovation supports physical infrastructure needs.”

AFC initially faced resistance from its board regarding this new direction, with some members questioning whether a development finance institution should be investing in venture capital. However, Gebreyes successfully argued that this approach would allow AFC to address a broader segment of the technology ecosystem - not just the late-stage “unicorn” companies.

The corporation’s strategy involves two complementary approaches: supporting early-stage ventures through fund investments and then potentially co-investing in later rounds as these companies mature. This allows AFC to build relationships with promising startups from their earliest stages while managing risk through diversification.