Africa Finance Corp Bets $100M on Early-Stage Startups

Africa Finance Corporation spent nearly two decades building bridges and subsea cables. Now the $19 billion development bank is doing something its own board initially rejected: backing tech startups.

AFC just committed $100 million to African venture capital, with $40 million already flowing to two funds. Future Africa is receiving $15 million, while LightRock Africa gets $25 million, making them the first VC firms to secure funding from this unlikely new backer.

The timing couldn't be more critical. Funding from development finance institutions, historically the largest source of capital for African startups, collapsed to new lows in 2025. Africa-focused fund managers raised just $107 million last year, an 87% drop from the previous year.

Begna Gebreyes, who leads AFC's technology division, spent years convincing his board to embrace this shift. They told him they ran an infrastructure developer, not a venture capital business. But Gebreyes saw something his colleagues were missing.

Around 2021, he realized digital services like fintech, e-commerce, and e-health would make Africa truly competitive. Supporting these startups would drive traffic onto the subsea cables AFC had already financed and fill the data centers it was building. Tech investment wasn't abandoning infrastructure—it was completing the vision.

AFC had already backed late-stage winners like Moniepoint, M-KOPA, and Wave. But these were companies already profitable with massive scale, representing maybe 2% of Africa's tech ecosystem. The other 98% of early-stage startups were being ignored.

Rather than retooling their entire organization, AFC chose a smarter path: invest in VC funds that know how to nurture early-stage companies, then co-invest directly as those startups mature. This approach lets AFC build relationships with promising companies years before they need growth capital.

The Ripple Effect

AFC isn't stopping at $100 million. As a multi-billion-dollar institution with deep ties across African governments and businesses, it's leveraging those connections to crowd in additional capital from foundations, endowments, and pension funds.

These institutional investors want exposure to African tech but lack boots on the ground. AFC is offering them a solution: invest alongside us in proportion to our commitment. The goal is attracting an additional $300 to $500 million in third-party capital.

This multiplier effect could inject up to $600 million into Africa's struggling VC ecosystem at a moment when funding has nearly dried up. For thousands of entrepreneurs across the continent, AFC's pivot means access to capital that might have otherwise disappeared.

The infrastructure builder is discovering that sometimes the most important bridges connect innovators to opportunity.