There is growing optimism for Nigeria’s budding entrepreneurs as Africa’s startups become more investible and a growing number of professional ‘super angels’ woo them into record-breaking deals and private equity investments increase.
This was a consensus view of more than 500 early-stage investors at the just concluded Africa Early Stage Investor Summit #AESIS2020 in Cape Town, South Africa.
So far, total venture funding for African startups in 2020 has passed the $500 million mark. This is according to Maxime Bayen, a company builder at GreenTec Capital, a German, but African-focused investment firm. Bayen carries out surveys on investments secured by African startups.
However, most of his reports only contain deals of $1 million or more. In the first quarter of 2020, Bayen reported that 35 African startups had raised over $340 million.
Africa’s entrepreneurs show resilience, quickly digitising, and maturing as digital technology trends further mainstreamed in 2020. Many attending investors at the Africa Early Stage Investor Summit confirmed this based on what is happening in their respective portfolios.
Ola Brown of Greentree Investment, founder of Nigeria’s Flying Doctors, sees healthcare and education as the two foundational pillars for the future of the continent. The rise of new and creative business models are helping to tackle inequality gaps and the delivery of critical products and services across the continent, such as Foodlocker Limited, Aspire Power Solutions, Chefaa, and LetMeIn.to.
A Deloitte Africa report presented by Adama Aristide Ouattara painted an optimistic future for Africa’s economies given the measures that companies have put in place in response to Covid-19. This means Africa’s start-up ecosystem would continue to rise in significance, serving as a key catalyst and engine for driving innovation and development across the continent.
#AESIS2020 speakers and panellists also see more cross-border collaboration within the continent, as the location is no longer a barrier for entrepreneurs and their businesses. Remote due diligence and virtual deal-making are also becoming the norm.
At the same time, investors recognise that more needs to be done to mentor and support entrepreneurs, particularly founders’ mental health, as leading and growing successful businesses in African markets are fraught with difficulties and challenges.
Nurturing talent – from venture building to venture to invest, particularly female founders and female fund managers – is critical to shaping continued growth across Africa’s markets.
‘Grit fund management’ presented by Eghosa Omoigui, founder and managing general partner of EchoVC, captured the long-term perspective and a determined focus on value creation as the key to unlocking success as an Africa-focused investor.
Wim van der Beek of Goodwell Investments elaborated the point in an expert panel, saying, “Fund managers have a role to play in addressing inequalities and social injustices by helping businesses that provide solutions and create opportunities to tackle inequalities.”
Despite the Covid-19 outbreak that obstructed the global economy, Nigeria’s startups attracted over $126 million in investment deals in the first nine months of 2020.
A recent venture capital data compilation by Startuplist Africa – a data-driven platform that focuses on African startups shows that startups in the financial services industry accounted for the largest investment deals of the total investments for the period.
The financial services industry attracted $46 million (38%) in investments for the period. This was followed by startups in the crypto industry with $17 million investment deals, biotechnology with $15 million, healthcare with $11 million, e-commerce with $10 million, and renewable with $7 million, while others account for the remaining.
