The International Finance Corporation (IFC), the World Bank’s private sector arm, is considering an equity investment of up to $6m in Flat6Labs’ new $85m Africa Seed Fund. This commitment, processed under the IFC Startup Catalyst Program, includes a proposed $5m from the IFC’s own account and up to $1m from the Women Entrepreneurs Finance Initiative (We-Fi), which the IFC implements.
The Netherlands-based fund will focus on pre-seed and seed-stage investments in North, West, and East Africa, a region that has seen a decline in fundraising volumes since 2022. Flat6Labs, an Egyptian accelerator and venture capital fund manager, will manage the fund. This is not the first time the IFC has partnered with Flat6Labs, having invested in three of its previous funds.
The Africa Seed Fund aims to address the financing gap for early-stage startups in sub-Saharan Africa. The IFC’s blended finance co-investment, with its small level of concessionality estimated at up to 0.17% of the total project cost, is designed to attract other investors and stimulate the ecosystem. The fund will provide crucial capital to pre-seed and seed startups, fostering entrepreneurship, innovation, and digital infrastructure, which are expected to create jobs and boost trade, integration, and financial inclusion. A key goal is to increase support for women-owned and led startups, with industry-leading targets.
The fund has a target size of $85m and a hard cap of $100m. It will target investments in Egypt, aiming for 49% of invested capital to be deployed there, as well as other countries across North, West, and East Africa, including Nigeria, Ghana, Kenya, Morocco, and Senegal.
Flat6Labs has a track record in the region, having invested over $16m in startups and helped raise over $191m in follow-on funding since its inception 12 years ago. The firm claims to have created over 2,500 direct jobs and 80,000 indirect jobs through its previous funds in Egypt and Tunisia.
The Africa Seed Fund will invest in over 160 early-stage tech startups over the next five years, with ticket sizes ranging from $150,000 to $500,000. The focus will be on sectors such as FinTech, HealthTech, EdTech, GreenTech, AgriTech, and ClimateTech. Beyond capital, the fund will offer business support, mentorship, and logistical assistance.
The program will operate two cohorts annually, each consisting of 10 to 15 startups. Flat6Labs emphasizes a hybrid approach, combining virtual collaboration with on-the-ground engagement.
Ramez El-Serafy, General Partner for the Africa Seed Fund, highlighted the “huge untapped potential” in Africa’s tech and innovation sector. Dina el-Shenoufy, also a General Partner, emphasized the fund’s role in driving positive change and supporting experienced founders with larger ticket sizes.
The fund is a collaborative effort, involving the Egyptian Agricultural Innovation Project (AIP), the Scaling Digital Agricultural Innovations via Start-ups initiative (SAIS), and GIZ, on behalf of the German government. Flat6Labs anticipates that the fund will contribute to generating over $700m in revenue, supporting over 1,200 founders (with a target of 20% female participation), and creating more than 14,000 new jobs.