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Modus expands to sub-Saharan Africa with the launch of its $75m fund focused on AI and blockchain

New York-based venture capital platform Modus launched Modus Africa, a venture capital fund for AI and blockchain startups across sub-Saharan Africa, TechCrunch has learned. The fund is expected to reach its first close in the first quarter of next year.

The spin-off continues Modus’ streak of moves over the past 18 months, which has seen it add branches in Abu Dhabi, Cairo and, most recently, Riyadh, backed by institutions like Mubadala’s Hub71. Modus says its entry into Africa creates an “additional conduit of market access for Modus portfolio companies while enabling African startups to grow in the MENA region.”

As a “holistic venture capital platform”, Modus operates three business units focused on entrepreneurs and startups in the MENA and GCC regions. They include the Venture Builder, which works with early-stage idea and MVP-stage companies. Then there’s Corporate Innovation, a service platform that leverages internal corporate know-how to support businesses and government entities. And its venture capital arm provides investment to early- and mid-stage startups, such as recruiting platform Ogram.

On its website, Modus states that its fund is backed by several investors ranging from UHNWIs, family offices, private investors and government-backed entities from the US, EU and MENA region.

Although Modus primarily invests in overseas-based companies that are “portable to the Middle East,” as well as startups in Egypt and the GCC, its expansion into sub-Saharan Africa comes as no surprise. Last year, African startups raised over $5 billion and hit five unicorns (per this report, the continent has seen a 250% year-on-year growth in funding and surpassed capital deployed in the MENA region). And despite current macroeconomic trends and conditions that have led to layoffs, rounds and closures, startups across the continent are put on top the record number of fundraisers last year.

Unlike other companies with flagged funds interested in Africa, Modus’ interest in AI and blockchain technologies is intriguing. Although it has household names such as InstaDeep in Tunisia, Sama in Kenya and DataProphet in South Africa – and several web3 startups claiming to be blockchain-based – the AI ​​and blockchain sectors in Africa are still relatively nascent. The idea behind the adoption of this strategy can be attributed to Vianney Mathonnet and Andre Jr Ayotte, the general partners of the Modus Africa fund. The two partners, in an interview with TechCrunch, described how several stints in Dubai-based banking, finance and family offices pointed them towards the emergence of blockchain technology and its outsized opportunities and applications in Africa.

“Shortly after starting this project after noticing how massive blockchain and AI could be in Africa, we were approached by Modus Capital because they themselves wanted a pan-African strategy,” Ayotte said. . “They were looking for people with the know-how, network and experience to do this, so we started discussing how the partnership would work. Eventually, what happened was that our project became the Modus Africa fund.

LR: Andre Jr. Ayotte and Vianney Mathonnet (Sponsorship, Modus Africa)

According to a statement, Modus says Africa has the potential to reach over 200 million new blockchain users over the next four years, fueled by necessity and a rapidly growing tech-savvy population. Nevertheless, the six-year-old venture capital firm isn’t just tempting purely AI and blockchain startups; instead, it reduces controls in broader industry startups that implement these technologies in their products. The firm is currently closing three investments in startups using AI and blockchain in insurtech, fintech and healthcare technology, said general partners who control the fund’s thesis, direction and investment strategy. while leveraging Modus’ 50+ team to perform due diligence and portfolio management.

Mathonnet said Modus Africa, “independent of any jurisdiction”, will invest in around 45 seed-stage startups and allocate 50% of the $75 million SDG-focused fund for follow-on investments, particularly in series. A. These checks will range from $350,000 to $1.2 million for both stages.

“As a fund, we will reinvest in our winners and our LPs are also looking to reinvest in them outside of the fund, catalyzing even more money into the ecosystem in Africa,” the partners said. “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 lot of things will flow in all these regions. That said, however, we are exploring new regions and seeking key partnerships to enter these markets and add support and sustainability to deal flow. Some of these markets include the Democratic Republic of Congo (DRC), Niger and others in Francophone Africa.

Speaking on the Modus Africa training, Kareem ElsirafyModus’ managing partner, said in a statement: “Modus is proud to launch an Africa-MENA Investment Corridor to continue supporting and investing in emerging innovation ecosystems. The Modus platform is uniquely positioned to bring impact and value to African communities through operational, institutional and financial capital. We are delighted to have Vianney and Andre leading this trip.

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