Google Invests $50M in African Startups

Google to Invest $50 Million in African Startups Through New Fund

Google has revealed plans to allocate up to $50 million towards early- and growth-stage startups across Africa, utilizing its Africa Investment Fund. This initiative represents an escalated commitment to bolstering the continent’s business landscape.

$1 Billion Tech Investment in Africa

The announcement was made during a virtual event led by Google CEO Sundar Pichai, detailing the company’s intention to dedicate $1 billion over the next five years to technology-driven projects within Africa.

These projects encompass improvements to internet connectivity, exemplified by Google’s Equiano subsea cable, alongside investments directed towards small businesses and emerging companies.

Existing Support Programs

Previously, Google addressed support for startups through programs like Google for Startups Accelerator Africa and the recently established Black Founders Fund.

Google for Startups Accelerator Africa

Over the past three years, the accelerator program has provided mentorship and resources – without requiring equity – to over 80 startups operating in the seed to Series A phases. Notable participants include Twiga, Paystack, and Piggyvest.

Collectively, these 80+ startups have successfully secured over $100 million in venture capital funding.

The Black Founders Fund

Conversely, the Black Founders Fund provides non-dilutive financial awards to startups led by Black founders across multiple regions.

The fund operates with a $5 million allocation in the U.S., a $3 million fund for Africa, and a $2 million fund in Europe.

Currently, 50 startups have been chosen to participate in the African program, commencing on October 13th. Each selected startup will receive up to $100,000 in equity-free funding, alongside Google Cloud credits, Google.org ad grants, and further assistance.

Google reports that 40% of the 50 chosen startups are led by women, representing nine countries and spanning twelve different industry sectors.

Nitin Gajria, Managing Director of Sub-Saharan Africa at Google, explained the rationale behind the Black Founders Fund: “A considerable disparity exists in access to funding, with certain demographics facing greater obstacles than others. We’ve observed this particularly with Black and female-founded startups, and our fund aims to mitigate this gap.”

google sets up $50m fund to invest in african startups

The New Africa Investment Fund

Distinct from the previous initiatives, the newly announced $50 million Africa Investment Fund will involve Google acquiring equity stakes in rapidly expanding African startups in return for varying investment amounts.

Gajria described this as Google directly introducing venture capital to the continent.

Investment Strategy

According to the fund’s investment principles, the Africa Investment Fund has no preference for specific sectors or geographic locations.

The fund’s operation is anticipated to mirror the approach of the Google for Startups Accelerator program.

Broad Geographic Focus

While Nigeria, Kenya, South Africa, and Egypt represent the core of startup and venture capital activity in Africa, the accelerator program actively seeks applications from startups in less-funded and often overlooked regions.

These regions include Algeria, Botswana, Cameroon, Ivory Coast, Ethiopia, Ghana, Morocco, Rwanda, Senegal, Tanzania, Tunisia, Uganda, and Zimbabwe.

“We aren’t limiting ourselves to particular industries. Our focus is on investments where we believe Google can contribute significant value,” Gajria stated. “Founders developing innovative solutions to genuine challenges in Africa will align perfectly with our investment criteria.”

Support for Investee Companies

Startups receiving investment from the Africa Investment Fund will gain access to Google’s personnel, network, and technological resources.

Regarding the timeline for initial investments, Gajria indicated, “We are currently in advanced discussions with several potential candidates, though I cannot disclose specifics at this time. However, I anticipate being able to share further details shortly.”

Further updates will be provided as they become available.