The government-backed private equity fund of fund vehicle the Ghana Venture Capital Trust Fund is planning to sponsor a youth-focused venture capital fund.
The Fund is currently accepting applications from fund managers for the proposed fund. One of the requirements is a plan by the fund manager to achieve a targeted fund size of not less than GHS 100m.
The fund manager will be responsible for the day-to-day management and administration of the proposed Fund to be sponsored by VCTF. The successful fund manager will work with the sponsor to design a viable business model, implement fundraising, pipeline development, and investment strategies, implement the necessary processes, policies, and procedures, and successfully register, license, and launch the fund.
Why the Youth Fund is a timely solution.
Over the years, several youth-led innovative startups and businesses have been founded across various sectors, including technology, agriculture, fashion, and creative industries. These ventures contribute to economic growth and address social challenges, such as unemployment and poverty, by providing opportunities for young people to create their livelihoods. For instance, the startups that raised funding in 2023 collectively employ over 1,200 people (2023 Ghana Startup & Innovation Ecosystem Report).
Furthermore, youth entrepreneurship fosters a culture of innovation and creativity, as these founders often bring fresh perspectives and ideas. They leverage technology and digital platforms to disrupt traditional industries, develop solutions to pressing societal issues and promote social inclusion and empowerment. Companies like Complete Farmer, Farmerline, Degas and Agrocenta are connecting farmers to buyers, thus improving farmer income and reducing postharvest losses.
However, these entrepreneurs face many challenges, including limited access to finance. Loans from commercial banks come at a cutthroat interest rate (30%+), and there are virtually nonexistent venture capital firms for such early-stage ventures in Ghana. Also, 90% of the capital raised by startups was sourced from foreign investors. Moreover, 75% of the funded founders were educated abroad (2023 Ghana Startup & Innovation Ecosystem Report).
A local youth-focused venture fund will hopefully help bridge the financing gap and unlock the full potential of youth-led SMEs and maximise their contributions to Ghana’s economic development.
