Growing investor support for Africa’s innovation sector

This past week was one of the most exciting for the VC4Africa community so far. Forty innovators from across the continent convened in Nairobi for their official launch at DEMO Africa. This was an impressive showcase of innovators changing the face of the continent forever. 

The audience was impressed with the quality of the presentations. Many entrepreneurs won the hearts of the crowd with polished demos and passionate explanations of the problems they are working to solve. The learning curve was steep,  where the first day saw some great ‘presentations’ the second day already saw more ‘investor ready pitches.’

Engaging with the forty + entrepreneurs present at the event, VC4Africa learned that most (if not all) entrepreneurs received invaluable feedback on their business (some gaining insights on critical alterations they need to make to their business model) with many securing leads on both valuable partnerships and possible investors. Certainly the press continue to do their work as each venture gets multiple articles in both local and foreign media.

Speaking with a variety of investors who attended the event it was clear they were both impressed with the diversity of innovations and their real world business potential. One investor explained that nearly one in ten ventures presented at DEMO Africa fit their investment criteria. The investor went even further to explain that the other nine ventures are actually promising investments as well, its just a matter of getting additional capital involved with interest in these types of businesses.

But lets be clear. Only a few ventures are closing fundraising rounds when the depth and scope for investment is much greater. Where the investors early to the table have the best pick, there are many promising ventures still left standing on the sideline. The running theme for the week, and a key issue for the African innovation sector moving forward, is the need to expand the community of Angel investors across the continent. Indeed, the kind of investor that can come in and offer between 25K and 250K needed to prove a concept and position it for scalability.

From several conversations, and as outcome to several workshops surrounding the week’s events, there is a growing effort to engage high net worth individuals needed to unlock additional local capital. This effort was highlighted by a series of investor roundtable discussions held recently in Nigeria, South Africa and Kenya.  More specifically, the challenge here is to convince the investor, accustom to doing business in traditional industries like real estate, to consider investing a percentage of their wealth into technology related businesses. Certainly these individuals should be made aware of the opportunities now available in the more innovative sectors of the economy.

That said, many entrepreneurs question whether or not they are able to work productively with investors unfamiliar to their business. They don’t bring the domain expertise, they don’t appreciate the workings of technology related business models, and many times they have a hard time dealing with set backs and failures inherent to building a successful startup. It is an engagement effort we should continue to invest in, but it is generally agreed domain specific investors would do better.

In the meantime, it is clear there are a growing number of investors who will take advantage of the current situation. From the forty ventures that launched at DEMO Africa, twenty-eight of them have already secured outside funding at an average of 250.000 K. Many are working to pick up additional capital needed to further scale their business with conversations ongoing. The opportunities for Angel investors has never been so promising!

Join the VC4Africa Investor Network and take part of the movement.