New York-based venture platform Modus has launched Modus Africa, a venture fund for AI and blockchain startups in sub-Saharan Africa, TechCrunch has learned. The fund is expected to reach final closing in the first quarter of next year.
The spin-off continues Modus’s series of moves over the past 18 months, which saw the addition of branches in Abu Dhabi, Cairo and, most recently, Riyadh, backed by institutions such as Hub71 Mubadala. Modus says its entry into the African market creates “an additional market access channel for Modus portfolio companies and also allows African startups to enter the MENA region.”
As a “holistic venture platform”, Modus operates three business units focused on entrepreneurs and start-ups in the MENA and GCC regions. These include Venture Builder, which works with ideas and companies in the early stages of MVP. In addition, there is Enterprise Innovation, a service platform that leverages a firm’s in-house know-how to support corporations and government organizations. And its Venture Capital division invests in early-to-mid-sized startups like talent platform Ogram.
Modus says on its website that its fund is backed by several investors, including UHNWIs, family offices, private investors, and government-backed organizations from the US, EU, and MENA.
Although Modus primarily invests in foreign companies that are “moving to the Middle East” as well as startups in Egypt and the Gulf, its expansion into sub-Saharan Africa is not surprising. Last year, African startups raised over $5 billion and launched five unicorns (the continent saw a 250 percent increase in funding compared to last year and surpassed capital placed in the Middle East and North Africa, according to this report). And despite current macroeconomic trends and conditions that have led to layoffs, layoffs and closures, startups on the continent should beat last year’s record fundraising numbers.
Unlike other firms with notable funds interested in Africa, Modus’s interest in AI and blockchain technologies is intriguing. While it has big names like InstaDeep in Tunisia, Sama in Kenya and DataProphet in South Africa, as well as several web3 startups claiming to be built on blockchain, the AI and blockchain sectors in Africa are still relatively nascent. The thought behind the adoption of this strategy goes back to Viannie Mathonnet and André Jr. Ayotte, general partners of the Africa-focused Modus Foundation. Both partners told TechCrunch in an interview how several periods of work in banking, finance and family offices in Dubai pointed them to the emergence of blockchain technology and its huge opportunities and applications in Africa.
“Shortly after we launched 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,” Ayott said. “They were looking for people with the know-how, the network, the experience to do it, so we started talking about how the partnership would work. In the end, it turned out that our project became the Modus Africa Foundation.”
According to the statement, Modus says that Africa has the potential to attract over 200 million new blockchain users over the next four years, driven by necessity and a rapidly growing tech-savvy population. However, the six-year-old venture capital firm is not only taking risks with startups based solely on artificial intelligence and blockchain; instead, it is cutting checks for startups in broader sectors that are incorporating these technologies into their products. The firm is currently closing three investments in AI and blockchain startups in insurance technology, fintech and medical technology, said the general partners, who oversee the thesis, direction and investment strategy of the fund, and use a Modus team of 50+ to conduct due diligence. due diligence and portfolio management.
Matonnet said “jurisdictional independent” Modus Africa will invest about 45 seed stage startups and will set aside 50% of the $75 million SDG-focused fund for follow-up investments, especially in Series A rounds. These checks will range from 350,000 to $1.2 million in both stages.
“We as a fund will reinvest in our winners, and our partners also look forward to reinvesting in them outside of the fund, catalyzing even more money in the African ecosystem,” 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 there will be a lot of work in all of these regions. With that said, however, we are exploring new regions and looking for key partners to enter these markets and add some support and resilience to the deal flow.” Some of these markets include the Democratic Republic of the Congo (DRC), Niger and other francophone African countries.
Speaking about the creation of Modus Africa, Karim Elsirafi, Managing Partner of Modus, said in a statement: “Modus is proud to launch the Africa-MENA Investment Corridor to continue supporting and investing in new innovation ecosystems. The Modus platform is uniquely positioned to impact and create value for African communities through operational, institutional and financial capital. We are delighted to have Vianney and André leading this journey.”