The French development institution, AFD Group (Agence Française de Développement), has invested $5.5m in the Novastar Ventures East Africa Fund, enabling the fund to reach its final close at $80m.

Novastar is a venture fund dedicated to finding and growing the ‘new entrepreneurial stars’ of East Africa.

The Fund backs high-capacity entrepreneurs building businesses in sectors where positive social impact for lower-income households results from commercial growth and success such as education, sanitation, energy and information.

Novastar has already invested in eight companies to date.

They include Soko, a network of artisan jewelers in Kenya’s slums, SolarNow, a company that distributes, installs and finances low-cost domestic solar facilities for rural communities in Uganda, Sanergy, a franchisor of toilets in Nairobi slums, Pardigm, a company that sells efficient fuel-efficient stoves, and Bridge International Academies, a network of private nursery and primary schools for children from low-income households in Kenya, Uganda and Nigeria.

To date, these projects have provided superior primary education for over 215,000 pupils from low-income households, and renewable energy for over 90,000 people in East Africa.

The total impact of Novastar’s current portfolio is estimated at over 850,000 beneficiaries who live on less than $2 a day.

The Fund’s ultimate objective is to allow two million people to gain access to essential goods and services.

Siby Diabira, Investment Officer at Proparco, said: “Novastar backs companies that provide innovative solutions to large-scale social and environmental problems in areas where public services are insufficient.”

“It involves using the entrepreneurial model for a social mission in order to guarantee its profitability, financial independence and therefore, scalability,” he said.

Novastar meets the needs of young start-ups by offering minority equity investment right from the first development phases.

Following initial small funding rounds, Novastar can then fuel the rapid growth stage of proven businesses with more than $6m through multiple capital rounds.

In addition, Novastar supports and advises investee companies at the different stages in their development.

It is a member of their governance bodies and takes part in their main strategic decision-making.

The fund conducted two closings between March 2014 and March 2015.

Limited partners in the Fund include institutional investors (CDC, FMO, Norfund, European Investment Bank) and private investors (JP Morgan, Axa IM, Triodos Bank, family offices, foundations and individuals).

AFD Group has invested via its FISEA fund.

In 2015, a €30m budget was allocated to the fund to invest in social entrepreneurship in developing countries.