Africa’s early stage investor network on the rise, breaking down the numbers

investor africa-1At VC4Africa we have been busy building a leading network of investors actively investing in early stage companies.  There are more than 600 investors part of the community. Here are the results and some insights from our recent survey.

In an otherwise information scarce environment, entrepreneurs on VC4Africa are building up meaningful track records that develop over time. VC4Africa works to aggregate various information points about each company in its system and organizes this data in different ways that makes it useful for investors. In addition to the web-based system, VC4Africa is developing a network of partners that support members in due diligence, deal closing, and the monitoring of company progress post investment. To this extent, the VC4Africa organization is working to build a deal making engine needed to efficiently connect supply and demand, and as it exists across the African startup ecosystem. But so who are the investors part of the community and what do we know about them? Here is a break down from a recent survey we sent to 600 investors part of the VC4Africa community.

SurveyMonkey Analyze - Survey VC4Africa Investor Services 2014-1-2

We break down the network in more detail here:

» 71% of the investors are between 30 and 50 years of age. 12% are younger than 30 which is a segment we expect to grow the fastest the coming 10 years. On average, 40% of the investors have between 5 and 10 years of experience. But new players are certainly coming to the market, and we know that 35% of the network have less than 5 years working experience on the continent;

» 34% of the investors are Angels, 28% are VC firms, and 17% are part of a Social Impact Fund. The rest are accelerators, Govt. institutions and NGOs. The investors largely come from N. America, Europe, Middle East and Africa. African investors are from Ghana, Rwanda, Kenya, South Africa, Nigeria, Tanzania, Ethiopia, Egypt and Mauritius. Internationally they are from the United States, Canada, Russia, Germany, Netherlands, Belgium, Ireland, Hungary, United Kingdom, Norway, United Arab Emirates, and Singapore to name a few;

» 83% of the investors part of the VC4Africa network have already invested in an African company. Looking at the different sectors that grab their attention, 65% have invested ICT. 41% have invested into Financial Services, 41% in Agriculture, and 28% in Health Care and Education. 16% of the investors invest less than USD $25,000 on average. Again these are mostly the angels supplying much needed capital for early stage companies. About 32% invest between USD $25,000 and USD $100,000, 21% invest between USD $100,000 and USD $500,000, and 31% can invest USD $500,000 and more;

SurveyMonkey Analyze - Survey VC4Africa Investor Services 2014-2-1-2

» Investors on VC4Africa look first for quality of management team and then their financial performance as a company. Prior experience and market size are two other important considerations when exploring a new investment opportunity. The affinity the investor has with the country and the sector is also important. To our surprise, these factors were given more weight than both i) the social impact of the venture and ii) whether or not there was a clear exit strategy;

» Taxation policy is the most important factor for investors deciding whether or not to invest in a country. So if governments want to see more activity and support for their innovations sector, this would be the first place to start. Basically, how do I get money into the country and back out? Is this an efficient process and what is the tax rate in comparison to other markets? Country selection is also coupled with the investor’s affinity for a market, and again these factors were weighted more heavily than things like political stability of the country and economic growth;

» Only 19% of the investors part of VC4Africa are women!! Clearly there is more work to be done here and we are calling out to our female community members to step forward and add some perspective. Better yet, contact us ([email protected]) so we can interview you and find out more about how you are investing in African companies. Let’s use that as inspiration for others!

Are you an investor looking to get involved?

We agree that more private sector capital is needed if the continent’s top innovators are going to reach their potential. Indeed, bringing together Angels, early stage VC investors, and Social Impact Funds, is a critical step needed to support transformative entrepreneurs building scalable enterprises. They aren’t going to get this help from MFIs, Banks or large Private Equity, so this is really where a network like this makes a difference. Take a look at the SME Performance Index to read more about the investment activity of these investors and where they are making their allocations.

As part of DEMO Africa 2014 we have put together a special package for investors who would like to join the network.

This package includes:SurveyMonkey Analyze - Survey VC4Africa Investor Services 2014-1-2-2-1

» a 15% discount on DEMO Africa ticket
» a 15% discount on VC4A Pro Account
» Access to the companies financials
» Ticket to Investor Cocktail opening evening
» Ticket to Investor Bootcamp – Wed, 25th
» Access to the Investor Lounge and Deal Room @ Demo

Please see the details for this package online.

And if you see ways to support and/or get involved, please reach out to us as we are eager to follow up!

Photo Credit: FBN Capital Limited via Compfight cc