By David van Dijk
‘Angel investing is on the rise across Africa.’ This is a commonly heard phrase for those of us active in the early stage investment space on the continent now. And this phrase is often quickly followed by another: ‘yet, there is still a need for more angel investors and investments…’. Both phrases indeed capture the ever-developing angel investment context in Africa and it’s important to highlight the opportunities for everyone active in the ecosystem as we approach our – VC4A and ABAN’s – 6th edition of the Africa Early Stage Investor Summit (#AESIS2019) (https://bit.ly/2kfo3zk) . In this brief thought piece, we aim to join in on the reflection.
Rewriting the African narrative
As ABAN President, Tomi Davies, points out in his article ‘Momentum for the African Angel (https://bit.ly/2krGLUa)’, 2018 was a milestone year in terms of angel investments. Thanks to angel investors as well as early stage venture capital funds, African startups raised more than USD $725 million across more than 450 deals. And according to GSMA’s Maxime Bayen, 51 African startups have raised (https://bit.ly/2jSjkTM) USD $1 million or more (https://bit.ly/2jSjkTM) so far in 2019, amounting to a total of $453 million. As avid investors with personal interests in seeing the success of promising African startups that offer solutions to revolutionize peoples’ lives, we warmly celebrate these achievements.The so-called ‘African narrative’ is definitely being rewritten.
At the same time, we recognize and wish to raise attention to the incredible potential for even greater venture growth and investment. Mr. Davies enumerated the many transformative factors that shed light on the opportunities staring us down. The takeaway of his analysis is this: Never before has the pipeline of African innovation been so investible, thanks to increasing urbanization, digital penetration, a growing labor force, and much more.
Today, there are approximately 50 active Africa-focused angel investor groups – ABAN, LAN, Dazzle Angels, Jozi Angels, and Cairo Angels to name a few, with new ones arising in Benin, The Gambia, Ethiopia and Mali. Next to pre-seed, seed and series A funding, what can angels offer? Angels can help solve early stage African venture challenges by mentoring the rising entrepreneurs and by connecting them to our business networks, so they can continue to build up their ventures. Angel support that targets women-led ventures is especially vital considering the traditional stumbling blocks they must overcome to achieve success.
Another thing that existing angel investors can do is to spread the word and lend support to other aspiring angel investors who wish to invest in African businesses. Meghan McCormick in her aptly named article, Africa Needs More Angel Investors’ (https://bit.ly/2lR5VMl), highlights the fact that high net-worth individuals (HNIs) do not invest in African startups is simply because they are not familiar with asset classes adjacent to tech, a space where many African startups fall (naturally, many also fall within tech). Angels therefore have a dual role to play – both entrepreneur-facing and towards fellow investors – if we want to see the continent take off even further.
Capitalizing on the (controversial) Jumia opportunity
2019 will go down as the year where the first African tech-focused company, Jumia, launched on the NYSE. It was, and remains, a controversial topic (https://bit.ly/2lR642l), to say the least. But what has happened since is something we can all appreciate. Investors’ eyes have turned increasingly more to the African continent. What is happening there? Who are the players? Which companies should we be paying attention to? How can we invest in, and be a part of, the next big success story?
Building on this attention and responding to these questions is what we, as pivotal players in the African startup ecosystem, need to do. These are some of the very key reasons we, at VC4A (https://VC4A.com/) andABAN (https://ABANangels.org/), hold the Investor Summit each year. It is an exclusive setting where eager African investors and ecosystem stakeholders come together to share tips and tricks, and to discover Africa’s most interesting Series A investment opportunities through the VC4A Venture Showcase.
Your chance to meet the top-10 of Africa’s Series A-ready ventures is just around the corner
For those of you investors looking for vetted Series A-ready companies to add to your portfolio, VC4A’s Venture Showcase will have what you’re looking for. Founders from 10 innovative, high-growth scale-ups will present their ventures to Summit attendees on 14 November. They will each give a three-minute pitch and investors can further personally engage with the entrepreneurs in 30-minute deep dive sessions, that will be held in a private room at the Summit venue.
VC4A’s Venture Showcase is a great example of true industry collaboration. The vetting process is fully done by partnering external investors, where angel groups are referring their portfolio companies ready for the next round. Partner VCs then assess the opportunities and ultimately decide who will be on stage at the Summit.
“In 2019, the investor participation has been just outstanding, with 40 major VCs and multiple angel groups involved in the process,” says Alina Vinogradova, VC4A’s Head of Programs and Partnerships. “We believe initiatives like this help to build trust and foster collaboration between industry stakeholders, and importantly, create both co-investment opportunities and exit opportunities for our partners.”