AFC enters African VC with $40 million backing for Future Africa, Lightrock

Africa Finance Corporation, the development bank with over $19 billion in total assets, has committed $40 million to Future Africa, an early-stage venture capital firm, and Lightrock Africa, the London-headquartered impact investment firm with investments in Moniepoint and M-Kopa.

The commitment is part of a larger $100 million fund created within AFC’s telecommunications and technology department to invest in African tech venture capital managers. 

Funding from development finance institutions (DFIs) like the AFC has long served as the backbone of startup investing on the continent, but it fell to 27% of total commitments in 2025, according to the African Private Capital Association.

By deploying the equivalent of 3% of last year’s total African startup funding into tech-focused fund managers, the $100 million fund from the AFC, an Africa-focused development bank, could trigger a fresh wave of institutional investment in African tech.

That wave would be timely, as the amount raised by African venture capital fell for the first time in four years, with Africa-focused fund managers raising just $107 million across six final closes in 2025, an 87% year-on-year drop by value, according to the African Private Capital Association. 

“Our first two commitments are $25 million to LightRock and $15 million to Future Africa,” Begna Gebreyes, AFC’s head of heavy industries, telecoms, and technology, told TechCabal on a call on Friday. AFC has another $60 million to deploy across additional fund managers it is currently vetting. 

Established in December 2007, the AFC has built its reputation on infrastructure investment, such as oil and gas, mining, ports, telecoms, and subsea cables, and the commitment marks a sharp departure from its original mandate. While it has had some forays into African tech, they have been limited to late-stage co-investments in already validated large companies. 

The AFC’s $100 million fund-of-funds programme is designed to close that gap, and the timing could hardly be better, as the capital backing African tech shrinks. African tech startups raised $3.4 billion in 2025, with the Big Four markets (Egypt, Kenya, Nigeria, and South Africa) absorbing 82% of the total amount deployed on the continent. 

For the AFC and the two funds, the commitment is a win-win. Both funds receive significant capital for their fundraising efforts, and the AFC gains coverage across nearly the full African venture stack, from pre-seed to growth, and gives Gebreyes’ team a deal funnel for the direct, balance-sheet-deployed late-stage cheques AFC has always preferred to write.

AFC wants to bring $300 million from outside Africa

The drop in funding for local tech VCs can be attributed to local pension capital remaining a minor contributor to the funds African tech VCs are raising and to international LPs growing more selective about African tech exposure.

European venture investors, historically the largest source of capital into African funds, collapsed from 70% of commitments between 2022 and 2024 to just 21% in 2025, according to the African Private Capital Association.

The AFC’s participation in tech VC signals that an African-anchored balance sheet, accountable to African shareholders and funded substantially through African debt markets, is now willing to underwrite risk that European development banks are increasingly stepping back from.

The bank’s strategy is to use its commitment as the foundation for a parallel programme to raise $300 to $500 million in co-investment from US and European foundations, endowments, and pension funds, according to Gebreyes.

These are institutional investors who, according to Gebreyes, have wanted Africa exposure but lacked the on-the-ground capacity to vet individual fund managers across the continent. 

By offering them the ability to invest alongside AFC, the bank is positioning itself as the institutional credibility anchor that smaller African VCs cannot offer to large foreign LPs on their own. If that crowd-in strategy works, AFC’s $100 million becomes the catalytic layer for a $300 million capital pool flowing into African tech VC at exactly the moment the asset class needs it.