THE NEW AFRICAN ANGEL INVESTORS
In the present, the innovative African based startups attract a growing number of angel investors and venture capitalists. Read more to learn about this innovative revolution.
Last year Mark Zuckerberg staged a surprise visit to Nigeria and met with African tech developers and entrepreneurs. His first to sub-Saharan Africa has created a boost and placed the region’s tech businesses firmly in the world’s spotlight.
The Africa population contains the highest number of youngsters in the world. Out of the entire population, 200 million are the age of between 15 and 24 – This number is expected to reach 400 million by 2045.
The innovative revolution is driven by the young entrepreneurial spirit. A study in 2016 indicates that innovative African based startups attract a growing number of angel investors and venture capitalists and African early stage companies are fortifying increasing amounts of investments. The quality of ventures has been improved, and the early stage ecosystem has been drastically increased in the past few years.
More European and North American immigrants with African background are showing an increased passion to invest back into their communities and seeks out innovative new start-up companies in their home country. African entrepreneurs who have lived abroad are increasingly creating successful business ventures, based on local knowhow combined with the best international practices, utilising their skills and international experience. The efforts of these businessmen contribute to a substantial development, production and innovation growth in their origin country.
African Angel Investors
Another trend in Africa is that successful African entrepreneurs are becoming angel investors in the local start-ups. As many aspiring angel investors are seeking relevant guidance and training advice regarding the best practice of early stage investing, advisory boards and startup hubs have emerged in growing numbers throughout the continent. This is evidenced by the number of Angel groups in the continent of Africa which has been doubled from 25 in 2015 to 40 in 2016, across 25 African countries.
A successful example is The Lagos Angel network (LAN) of Nigeria and later came its sister network the South African Business Angel network “SABAN” to meet the demand of the growth in the business Angel activities.
Higher equity for smaller investment
A comparison with USA and European investment markets shows that the African investment market requires a smaller amount of capital to become a prominent.
Although a lower capital investment provides good opportunity for early stage market entrance and to gain a superior market position, international investors should of course be careful in making their investment in unfamiliar environments. It’s highly advised to co-invest with a trusted local partner or get guidance from an experienced local operator before making a seed investment.
Local partners are aware of the current business environment and political climate. Furthermore they also provide a vital source of subsequent evaluation and monitoring of the investment performance and progress.
Africa’s large population growth is certainly makes the continent a very attractive investment market. However making investments in unfamiliar environments can be extremely risky. International investors should be advised by a trusted local partner while making investments as the local partner will be aware the business environment to help you oversee the structuring, management, diligence as well as the closing of the investment deal.
Meanwhile the experienced African angel investors often have an advantage, as they combine best international business practice with local know-how. The local knowledge is the key for success.