Venture Capital in Africa
05 March 2019
Hello and thanks for being one of the first readers of vc news africa. We believe in the potential of African founders to innovate and grow the continent’s economy. We’ve spent the last six months analysing the African venture capital landscape and found the following:
1. Lack of Education and Investor Appetite
Investing in alternative asset classes such as venture capital is relatively new in Africa, as opposed to equity investment. Additionally, the allocation of funds by private, institutional and pension fund investors is considerably low, for example in South Africa it is estimated at 2% versus 30% in the USA and Europe. This is despite superior risk-adjusted returns from venture capital investments compared to the stock market. Investors often cite high risk and complexity as the reasons for their aversion to alternative asset classes.
2. Limited Visibility
African founders often struggle to secure the resources they need to grow their businesses due to their inability to meet investors. Traditional media does not cover African founders and startup success as much as their global counterparts. Consequently, there’s limited data on the amount African startups raise; the number of deals closed; and the returns on these investments – mostly due to deliberate non-disclosure by venture capital firms and limited publication in the media.
3. A Need For Unity And Collaboration
Africa is the second most populous continent, which presents a great market for startups. However, the continent is divided into 54 nations. Geographic borders and international trading laws often limit the potential market for startups. We believe that collaboration throughout the continent is necessary to build bigger businesses and open new markets.
We aim to make this a platform where African founders can be discovered, supported and celebrated. We aim to publish rich and valuable content for investors to learn about startup activity in order to boost investments in the sector.
“The right investments will unlock the (African) continent’s enormous potential. Young Africans will shape the future of not only their own communities but the entire world.” – Bill Gates
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