New data shows growing investor appetite in African early stage startups

New data shows growing investor appetite in African early stage startups - Post image

Data from the newly published 2016 Venture Finance in Africa research, conducted by VC4Africa, shows that the growing international and local angel investor interest in African startups is resulting in tangible investments.

Total invested capital more than doubled compared to last year’s data: from almost USD 27 million to USD 73 million, secured by 224 ventures who took part in the survey (48% of total). The average amount invested per venture also increased from USD 200K last year to USD 326K.

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Insights

The VC4Africa ‘Venture Finance in Africa’ report captures the performance of early stage, high growth ventures from Africa and the activity of early stage investors. The insights are broken down across five indicators: job creation, financial performance, investments, early-stage investor activity and ecosystem.

VC4Africa co-founder Ben White explains why this annual research is conducted:

"Operating as a founder or investor without quality information hinders your ability to make informed decisions. A critical challenge for those venturing in Africa. At VC4A we are working hard to address this. The members have come together to establish a basic index that starts to put real numbers behind Africa's growth story."

Annual research among entrepreneurs and investors

This is the third time VC4Africa has endeavoured in this annual research. As of September 2015 the data collection takes place continuously via the VC4Africa portal. The 2016 release is based on data collected in 2015 from 462 ventures from 41 African countries (see chart below) and 140 Africa-focused investors from 25 countries around the world. As the community continues to grow, it is expected the report will generates insights into what is happening across the larger startup space.

Performance over time

Innovative ventures yield high social and environmental impact and are a key driver for Africa’s development. Opportunity driven entrepreneurs are generating much of Africa’s employment, income and hope for a better future. But how are these companies progressing over time?

Datasets on this emerging segment are limited and there are few comparative studies. This research initiative feeds the creation of the African Venture Performance Index, a leading benchmark for the industry.

Top investment categories

The research shows top investment categories are related to the Technology sectors, and then followed by Agriculture, Health, Finance and Energy. The research also reveals that ventures that participate in sector events, or join an incubator or accelerator, are twice as more effective in securing capital for their venture. And of the investors part of the VC4Africa community 86% has invested in an African venture.

VC4Africa

The VC4Africa portal is a living database connecting supply and demand, the information, network and capital required to see African entrepreneurs realize their potential and to emerge as Africa’s next great success story. VC4Africa aims to be the world’s leading social network for entrepreneurs and investors in Africa. The VC4Africa community has over 30,000 members in 159 countries, including 1000+ investors. More than 4600 entrepreneurs in Africa present their companies on the platform: early stage ventures that require investments of above USD 10K, but less than USD 2 million.

For more information about the Venture Finance in Africa research initiative visit: https://vc4a.com/venture-finance-in-africa

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