Investing money in Africa is easy, but making money is the work of savvy investors - Post image

Investing money in Africa is easy, but making money is the work of savvy investors

Cape Town welcomed over 300 active and aspiring investors representing Africa’s early stage investing ecosystem for last week’s two-day Africa Early Stage Investor Summit organized by VC4A and ABAN.

Celebrating its fifth year, the summit attracted the highest ever number of early stage African investors from 35 different countries, and more specifically 25 African nations representing 110+ investor organizations to share expertise, experiences, and fostering collaborations to bolster the ecosystem of capital provision for African entrepreneurs.

Key takeaways from the Summit

As discussed during the closing panel,

  • Silicon Valley will not be replicated in Africa. Though there are lessons to be learned from the Valley, African VC faces unique constraints in scale, capital and exit opportunities. Rather than spend time ‘unicorn hunting,’ investors should push founders to build profitable, sustainable, and locally-adapted businesses.
  • Collaboration is required to build a thriving industry. Investors must be activists in attracting more capital and resources into African markets, especially from larger corporates, growth equity investors and development finance institutions (DFIs). More collaboration is needed in designing instruments and financing structures tailored to African ventures.
  • Human capital and diverse teams will be a key to success. In the coming decade, Africa will hold the majority of the global youth population, bringing a wealth of opportunity and innovation. Yet accessing strong talent and building diverse teams remains a stark challenge for most ventures. Investors want to see more female and locally-led organizations with thoughtful human capital strategies.

As Keet van Zyl from Knife Capital expressed during the opening panel discussion: “It is easy to invest money in Africa right now, but it is hard to make money in investing here. The key is to be exit centric – we only invest in entrepreneurs who are focusing on building sustainable businesses that can exit.” Ben White, CEO of VC4A says, “This conversation succinctly captures the challenges venture capital faces in Africa and why we need to keep working to strengthen and support the entire African venture ecosystem.”

Special announcements

One key announcement at the Summit came from Nikunj Jinsi from IFC Venture Capital: the World Bank Group has launched L’Afrique Excelle, a post seed stage acceleration program and showcase of the best startups from Francophone Africa. The program, following the first XL Africa cohort, will target and select high growth business in order to provide much needed support to the region’s nascent ecosystem. “With the conversations around the current lack of resources availed to Francophone Africa, and the importance of public-private partnerships, having frequently surfaced in the Summit sessions, this news was highly welcomed and appreciated by all in attendance,” says White.

While still in the early days, angel investors are experimenting across the continent and seeking ways to professionalize within their home markets. ABAN president Tomi Davies presented “Finding Product/Market Fit: The State of Angel Investing in Africa” – a first ever scoping study by ABAN in partnership with infoDev / The World Bank Group on angel investing in Africa. The ABAN network has grown from 5 to 80 active networks and it is important to now have research that captures this emerging investor segment.

Babajide Sodipo, Regional Trade Adviser with the African Union (AU), announced a new partnership between the AU and ABAN formalizing their joint ambition in supporting entrepreneurs and SME’s across the continent. David van Dijk, ABAN Executive Director: “It’s great to see so many connections being made. More importantly we are excited by the level of engagement. Now is the time to take an active role and to be part of the next great African success story. We invite all actors and stakeholders to join the conversation.”

“It was the largest and most successful summit we have run with over 60 speakers participating in 7 panels, 4 investor masterclasses, 3 keynotes, 2 roundtables and 1 fireside chat. It’s amazing to see this industry rise in Africa. The passion and commitment shown by speakers and participants alike to partner with entrepreneurs to unlock the continent’s opportunities demonstrates how much there is to still achieve and I have no doubt that this ecosystem will prosper”, concludes White.

The diversity of investor delegates in attendance included business angels from across the continent, venture capitalists, impact investing funds and public sector funding agencies. Also in attendance were research organisations, academic institutions, leading accelerators and of course, highly driven entrepreneurs that managed to secure the very few seats available to them provided by the VC4A Venture Showcase – Series A program. Highlights from the Academy Day, Summit Day and the Cape Town Innovation Tour are detailed below.

Academy Day

For the very first time, the Summit included an Academy day on November 11th which sought to address the challenge of access to investor knowledge and skills prevalent in the ecosystem. Instituting two parallel tracks for aspiring and more experienced investors, the Academy Day covered concepts including tips on becoming a successful early stage investor, as well as insights into managing investment portfolios and ultimately exit early stage investments.

Academy day culminated in an elegant yet jovial networking event, hosted by our event partner Naspers and held at their Nasdak rooftop venue. This official opening investor cocktail gave delegates representing 110+ investor organizations another chance to seal partnerships while enjoying a beautiful view.

Summit Day

Summit Day on November 12th commenced with a thought provoking keynote speech by Tomi Davies, titled “Getting Investment Ready”, stressing the importance of thoughtfully considering this widely cited concept in the African context, and challenged delegates to evaluate their existing conceptions of investment readiness when looking to invest in early stage entrepreneurs. This was particularly refreshing and befitting as it set the tone for the lens through which delegates, particularly the investors in the room, would engage in the VC4A Venture Showcase – Series A later in the day.

The morning of the Summit Day consisted of panel sessions addressing critical topical issues such as “The African Exit!”, “The Impact of The Rise of Female Investors” as well as a session on “Exploring Alternative Funding Models”. Common sentiments shared across these panels were that these discussions needed to happen more often amongst investors, thus reinforcing the need for further research, sharing innovative strategies, and relationship building in the early stage investment landscape.

Cape Town Innovation Tour

On Wednesday 14th, during the Cape Town Innovation Tour our international group of investors gathered to visit 3 hubs, 1 coding campus, 15 startups,  including Aerobotics for a post XL Africa catch-up and all made possible by event partner Merck Accelerator. For many who were not residents of Cape Town, they got the perfect opportunity to say cheers to the Mother City and say goodbye until the next Summit: #AESIS2019!

Special thanks to Sarah Alexander from Blue Haven Initiative and Bakang Moetse from GSB’s Bertha Centre for sharing their inputs and their support shaping this article. To learn more about the Africa Early Stage Investor Summit visit www.AfricaInvestorSummit.com or contact team [at] africainvestorsummit [dot] com.

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