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

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

The spinoff continues Modus’ string of moves over the past 18 months, which have seen it add branches in Abu Dhabi, Cairo and, most recently, Riyadh, backed by institutions such as Mubadala’s Hub71. Modus says its entry into Africa creates “an additional market access channel for Modus’ portfolio companies, while enabling African startups to expand into 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 companies with early-stage ideas and MVPs. Then there’s Corporate Innovation, a service platform that uses the firm’s in-house know-how to support corporations and government bodies. And its venture capital arm provides investments in early and mid-stage startups such as staffing platform Ogram.

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

Although Modus primarily invests in overseas-based companies that are “portable to the Middle East” as well as start-ups in Egypt and the GCC, its expansion into Sub-Saharan Africa is not surprising. Last year, African startups raised over $5 billion and minted five unicorns (at that report, the continent saw 250% annual growth in funding and surpassed capital deployed in MENA). And despite the current macroeconomic trends and conditions that have led to layoffs, disruptions and shutdowns, the continent’s startups are placed on top record fundraising numbers last year.

Unlike other tokenized fund firms interested in Africa, Modus’ interest in AI and blockchain technology is intriguing. While there are big names like InstaDeep in Tunisia, Sama in Kenya, and DataProphet in South Africa—as well as several web3 startups that claim to build on blockchain—Africa’s AI and blockchain sectors are still relatively nascent. The thinking behind adopting this strategy can be traced Vianni Mattone and Andre Jr. Ayotte, the principal partners of Modus’ Africa-focused fund. Both partners, in an interview with TechCrunch, described how several stints in banking, finance and Dubai-based family offices led them to the emergence of blockchain technology and its vast potential and application in Africa.

“Shortly after we started this project, after seeing 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, the network, the experience to do this, so we started discussing how the partnership would work. Ultimately what happened is that our project became the Modus Africa Fund.”

Modus Capital

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

According to a statement, Modus says Africa has the potential to reach 200 million+ new blockchain users in the next four years, fueled by the need and rapidly growing tech-savvy population. Nonetheless, the six-year-old venture capital firm isn’t just taking chances on pure AI and blockchain startups; instead, it reduces scrutiny on startups in broader sectors that implement these technologies in their products. The firm is currently closing three investments in AI and blockchain startups in insurtech, fintech and healthcare, said the general partners, who oversee the fund’s thesis, direction and investment strategy, while using Modus’ team of more than 50 to conduct due diligence and portfolio management.

Mathonnet said the “jurisdiction-agnostic” Modus Africa will invest in about 45 startups and allocate 50% of the $75 million SDG-focused fund to follow-on investments, particularly in Series A rounds. Those checks will range from $350 000 to $1.2 million over the two stages.

“We as a fund will reinvest in our winners and our long-playing companies are also looking to reinvest in them outside the fund, catalysing even more money into 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 good deals will flow in all those regions.” However, with that said, we are exploring new regions and looking for key partnerships to enter these markets and add some support and resilience to deal flow.” Some of these markets include the Democratic Republic of the Congo (DRC), Niger and others in Francophone Africa.

Speaking about the formation of Modus Africa, Karim Elsirafimanaging partner of Modus, 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 deliver impact and value to African communities through operational, institutional and financial capital. We are excited to have Vianney and Andre leading this journey.”

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