Earlier this week, Business Case Africa caught up with Julia Stausberg-Umuerri, Vice President of Development Programmes and Business Support at DEG – Deutsche Investitions- und Entwicklungsgesellschaft, and Rena Terfrüchte, Director of Industries & Services for Africa and EMECA at DEG.
Speaking from DEG’s headquarters in Cologne, Germany, both the women leaders, spearheading the investment in Africa, shared insights into the institution’s vision for empowering African startups and its focus on the continent.
Julia found her path to development finance not in boardrooms but in classrooms and the bustling cities of Africa. Trained in anthropology and sociology, she spent her early career in Nigeria and Ghana, where she witnessed both the promise and the pitfalls of traditional aid. Too often, well-meaning projects failed to endure. That experience convinced her that real, lasting change would come from entrepreneurs building their own solutions. Thirteen years on, she has found in DEG a home where that conviction is put into practice.
“I became a bit disillusioned with classical development aid,” she admits. “But I began to see the private sector, especially startups, as a far more powerful lever for empowerment and self-driven development.”
Similarly, Rena took a very different route into development finance. A German and US national, she trained as a banker and began her career in commercial banking in Germany. Her turning point came through a chance encounter with a DEG colleague whose passion for the work was contagious. Intrigued by the promise of combining finance with real impact, Rena decided to make the switch. Eighteen years later, she remains convinced she made the right choice.
“Back then, I met a DEG colleague who was so convinced of the impact of her work and the environment she worked in that it made me curious to look closer at DEG,” Rena recalls. “Eighteen years later, I’m still here.”
Backing Africa’s boldest ideas by helping startups cross the first hurdle
When DEG rolled out its develoPPP Ventures programme in Kenya in 2020, the aim was to plug one of the hardest gaps in Africa’s startup ecosystem: the very first round of financing.
“Getting that first investor is often the toughest hurdle for a startup,” says Julia. “Our co-financing is designed to unlock that door. We provide a maximum of 50% investment – and then companies will bring in angels, VCs or even family and friends.”
Since launch, the programme has made almost 100 investments, mainly in Kenya, Tanzania, and Rwanda. With €50 million invested so far, startups have gone on to attract more than four times that amount in additional funding. Many operate in sectors that tackle urgent needs: logistics, pharmaceuticals, sustainable aquaculture, digital finance, and climate tech.
Through the develoPPP Ventures programme, DEG typically backs around 30 companies a year across Kenya, Tanzania, and Rwanda. The tickets may be small, but their purpose is catalytic: to unlock follow-on funding and prove that early-stage African ventures are worth the risk.
This venture push sits alongside DEG’s wider mandate, as Rena explains. “For more than 60 years, DEG’s mission has been to grow the private sector in emerging markets. We do this with long-term financing, technical support, business support services, and impact-driven programmes. The goal is always to drive impact and growth for the economies we work in.”
Africa has become central to that mission. Roughly a quarter of DEG’s global portfolio is now invested on the continent, surpassing €3 billion in commitments last year. “From an impact perspective, from a climate transformation perspective, and from a business perspective, Africa is a strategic pillar for us,” says Rena.
For Julia, it is precisely Africa’s challenges that make the startups so compelling. “Africa is a market of scarcity, with obstacles you won’t encounter in Europe. But that scarcity drives entrepreneurs to tackle real problems,” she says. “Our goal of the DeveloPPP program is to identify the solutions and help the African startups to scale.”
Climate action, in particular, is a focus across DEG’s portfolio. “Our strategy is called Impact, Climate, Returns,” Rena adds. “ So the climate angle is one of the three key targets of our strategy, of our business, not only in Africa, but across the globe.”
That flexibility has been welcomed. An external evaluation of DEG’s develoPPP Ventures programme recently highlighted how founders valued not just the capital and technical assistance, but also the freedom to chart their own path.
When banks step back, DFIs step in
Across Africa, entrepreneurs often speak of the same frustration: access to finance. Commercial banks tend to shy away from small and early-stage businesses, while venture investors remain cautious about exits and returns. That’s precisely where development finance institutions (DFIs) like DEG see their role.
“Whenever commercial banks are reluctant because of the perceived risk, that’s the moment DFIs should step in,” explains Rena. “We provide longer tenors than local banks, share risk, bring in additional investors, mobilize partners, and even use government or EU funds selectively. But above all, our focus is to bring in private investors.”
DEG then works with firms that are not yet “bankable,” offering technical assistance to help them build capacity. The aim is to open doors to financial markets that would otherwise remain shut.
Yet the challenges are real. Venture capital on the continent has slowed dramatically since the highs of 2021, and exits remain difficult. “It’s no secret that it’s tough to make the asset class work in Africa,” notes Julia.
“But that’s why we focus on the earliest stage. By supporting pipeline creation, we can help identify startups that grow into investment-ready companies for VCs, funds, and ultimately other DFIs.”
“Our role is to make these startups ultimately become investment targets,” Julia says.
The numbers highlight the scale of DEG’s commitment. Its Africa portfolio now stands at around €3 billion. In 2024 alone, €609 million was channelled into the continent - more than in many other regions. It aims to identify and invest in at least thirty startups each year in Africa.
Investing in VC funds and co-investing in Africa
Venture capital in Africa remains a challenging space to navigate. The limited supply of equity capital continues to hold back the growth of innovative startups, while foreign investors often hesitate - concerned about risks, scarce exit opportunities, and a relatively small deal flow compared to Asia.
Beyond its direct investments, DEG also backs venture capital and private equity funds on the continent, frequently acting as an anchor investor to help them raise additional capital and narrow the funding gap in Africa’s VC ecosystem.
For example, it acquired EUR 15 million stake in Partech Africa Fund II (PAF II), a VC fund managed by Partech Partners, helping young African technology companies to gain access to long-term financing more easily. It’s also poured in $5 million in TIDE Africa II LP (TIDE II) fund managed by TLcom.
“In the venture business, you can’t just provide capital, you need to provide knowledge,” explains Rena. “And doing that from a distance, from Cologne for example, is not the right approach. That’s why we often invest through funds that are closer to the companies and can work hand in hand with them.”
The slowdown in global VC since the highs of 2020–21 has only sharpened these challenges. Exits are rare, and large deals tend to go to a handful of companies, while early-stage startups struggle to attract attention.
“VC funding has slowed down not just in Africa, but globally. It’s no secret that realizing exits is difficult, and Africa is no exception. We’re playing our role in supporting this ecosystem by actively investing in VC and PE funds,” highlights Julia.
According to Julia, funding early-stage startups and building reliable pipelines remain among the biggest challenges for many venture capital funds in Africa. Investors often concentrate on a handful of companies that attract very large tickets, while opportunities at the lower end of the market are much harder to access. This gap is being addressed through DEG’s develoPPP Ventures program, supported by the German Federal Ministry for Economic Cooperation and Development (BMZ).
“Our role is to support the very beginning of that pipeline - identifying startups with potential, helping them grow, and ultimately making them attractive to private investors and other DFIs.”
By anchoring funds, co-financing early ventures, and backing entrepreneurs that others might overlook, DEG hopes to widen the funnel of investment-ready companies in Africa.
Nuts, networks, and new Ideas: Inside DEG’s diverse startup portfolio
The range of DEG’s African portfolio is as diverse as the challenges it seeks to address. Some investments go through established funds such as Adenia and Mediterranea Capital, or through banks like Equity Bank Kenya and Stanbic Kenya, which then channel credit to SMEs and climate-related projects. But others are more direct, backing entrepreneurs whose businesses touch everyday lives.
Under DeveloPPP Classic, its most successful portfolio company is Limbua in Kenya, a small agribusiness that produces organic nuts.
On the DeveloPPP Venture side, DEG has supported fast-growing startups such Dawa Mkononi in Tanzania, which is rethinking pharmaceutical logistics to ensure medicines reach clinics on time. In Kenya’s food sector, Victory Farms and Aquarech are pioneering sustainable aquaculture to meet rising demand for protein.
“Our programme is deliberately sector-agnostic,” explains Julia. “From agribusiness to fintech, health tech, edtech, mobility, and climate, what matters is that these companies provide positive impact, create jobs, and address real needs.”
For DEG, impact is measured not just in financial returns but in alignment with the UN’s Sustainable Development Goals. Using its in-house DERa rating tool, the institution tracks how each investment contributes to priorities such as decent work and economic growth (SDG 8), affordable and clean energy (SDG 7), and climate action (SDG 13). Gender equality and innovation also feature strongly.
Beyond aid: The shift towards partnership and bold vision
DEG sees several forces shaping Africa’s entrepreneurial landscape. Artificial intelligence remains the big topic among startups, though separating hype from substance remains a challenge. “Everyone says they’re using AI,” Julia notes with a smile, “but there’s no doubt it will transform businesses, even here in Africa.”
She notes, FinTech, long the continent’s star sector, is maturing, and climate tech is rising, though progress requires patient capital and long-term commitment. “But it’s absolutely essential - and central to DEG’s strategy of impact, climate, and returns.”
“Instead of pushing a certain agenda, we need to go where the market is heading and support approaches that work,” Julia advises the development community.
For Rena, the most striking trend is less about technology and more about philosophy. “I appreciate that development finance space is moving away from an outdated donor approach towards a joint investment logic,” she says. “At DEG, our role is to let entrepreneurs lead - and finance accordingly.”
In the end, both Julia and Rena agree that Africa’s future won’t be written by prescriptive strategies or donor checklists. It will be built by entrepreneurs with the courage to take risks, and by partners willing to back their vision.