New York-based venture platform, Modus, whose mission is to develop and support startups in the MENA region, has announced the launch of Modus Africa, a $75M VC fund for African startups powered by blockchain technologies and Artificial Intelligence.
The fund is led by two General Partners – Vianney Mathonnet and Andre Jr. Ayotte- veterans of the African startup ecosystem.
According to the statement seen by Technext, Modus Africa will nurture the growth and development of the continent’s local tech talent and early-stage impact-driven ventures. The new fund will close in Q1 2023 and invest in 45 startups at the Seed+ stage with a follow-on investment allocation, catalyzing foreign investment into the continent.
Speaking on the formation of Modus Africa, Kareem Elsirafy, the managing partner of Modus, said,
Modus is proud to be launching an Africa-MENA investment corridor to continue supporting and investing in emerging innovation ecosystems. The Modus platform is uniquely positioned to deliver impact and value to African communities through operational, institutional, and financial capital. We’re excited to have Vianney and Andre leading the way on this journey.
Kareem Elsirafy, the managing partner of Modus
Their two new partners and general managers, Vianney Mathonnet and Andre Jr. Ayotte, will oversee the management of Modus Africa. They will be in charge of the fund’s thesis, direction, and investment strategy.
Andre and Vianney have been active in the startup space for the past 6+ years and joined forces with Modus to develop innovation ecosystems and uplift underserved populations in emerging markets.
We’re thrilled to be joining Modus to focus on investing in African companies who have an incredible opportunity to bet on the 4th Industrial Revolution. AI could add another $1.5T by 2030 to the African economy, with about 50% of Africa’s GDP and blockchain already demonstrating its capacity to increase financial inclusion while lowering the overall cost of doing business in Africa.”
Andre Jr. Ayotte, Partner at Modus Africa
The VC firm, however, is not only focused on AI and blockchain startups. The firm is also closing three investments in startups using AI and blockchain across insurtech, fintech and health tech.
Read Also: African Startups raked in record $1.19bn VC funding in just 6 months of 2021
Modus Africa funding plan
Although Modus mainly invests in foreign-based businesses in the MENA area, its move into sub-Saharan Africa is not unexpected, given the rapid growth of African entrepreneurs over the years.
Last year, African businesses raised more than $5 billion and produced five unicorns, according to a Magnitt analysis. Additionally, regional funding increased by 250% year over year and outpaced capital invested in MENA.
Africa has the potential of 200+ million new blockchain users in the next 4 years, fueled by necessity and a fast-growing tech-savvy population. Modus believes startups utilizing AI and Blockchain technologies will not only accelerate the African 4th Industrial Revolution but also deliver strong financial returns coupled with immense impact on sustainable development.
Modus Africa will invest in about 45 seed-stage startups and allocate 50% of the $75 million SDG-focused fund for follow-on investments, especially in Series A rounds. These checks will range from $350,000 to $1.2 million across both stages.
The Modus Africa GPs have already established a deep foundation with leading Web3 institutions, corporates, and governments who all share a common vision of solving real problems on the continent.
Modus Africa will source, invest, and support startups that are leapfrogging ahead by merging traditional Web2 businesses with Web3 technologies.
Speaking more about the investment plan, the new partners told TechCrunch that,
In terms of countries, we know that tech talent and incubators are really strong in tech ecosystems like Kenya and Nigeria, Egypt, and South Africa, and it’s inevitable that a good deal flow within all these regions. With that said, though, we are exploring new regions and searching for key partnerships to enter those markets and add some support and sustainability for deal flow. Some of these markets include the Democratic Republic of Congo (DRC), Niger and others in Francophone Africa
General Managers at Modus Africa Fund
Modus has expanded rapidly in the past 18 months with branches in Abu Dhabi, Cairo, and, most recently, Riyadh, supported by champion backers such as Mubadala’s Hub71, USAID, and several other leading institutions.
The entry into Africa adds an additional conduit of market access for Modus portfolio companies while enabling African startups to scale into the MENA region.
The Blockchain and AI market in Africa
The blockchain and artificial intelligence sector in Africa have grown tremendously, thanks to the surge in bitcoin and other technological developments.
Although the adoption of blockchain technology is still not big enough, it is quite interesting that many private and public companies have finally begun to adopt the trends.
In the first quarter of 2022, blockchain firms on the continent raised $91 million, 1,688 per cent increase in capital flow over the same period in 2021, according to a report by CVV.
Between July 2020 and June 2021, there will be over 1,200 adoptions, with particularly high adoption rates in nations like Kenya, South Africa, Tanzania, Nigeria, and Ghana.
In 2021, $127 million was raised globally, accounting for 0.5% of all blockchain investment, with 96% of that money going to Nigeria, Kenya, South Africa, and Seychelles.
Read Also: Bitcoin, Ether, other cryptocurrencies lose value after FTX’s bankruptcy
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