Africa start-ups in dire need of angel investors

Delegates at a past Demo Africa conference. PHOTO | SALATON NJAU 

By MBUGUA NJIHIA

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Summary

• We are still deficient on the angel investor front – first from a simple head count and second from committed funds.

Demo Africa, a launchpad conference for emerging technologies and trends, concluded a successful sixth edition last week in South Africa.

This was the second time it has been held in a southern African country.

In this year’s edition, there were more than 210 startups from across Africa, launching to the world in front of an audience of media, technology buyers and investors.

Being a launchpad, it is understandable that many of the companies are in their very early stages. Thus in the normal capital raising cycle they would only register as promising prospects for venture capital and private equity type monies.

However, for early stage investors, these companies offer rich pickings that would deliver good returns, whether the funds are put in individually or syndicated across a group to minimise risks.

A key observation is that we are still deficient on the angel investor front – first from a simple head count and second from committed funds.

Speaking to many of the entrepreneurs during the Demo Africa boot camps, designed to have them investor ready, a common and prevailing thread was poor access to funds that that would allow for testing and firming up of viable products.

The African Business Angel Network has been at the forefront of activating investor groups in Africa with an obvious inclination to early stage companies, which have the most challenges accessing funding.

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Several investor master classes have been organised in Africa, Europe and the US and their attendance continues to grow with a target to have at least 2,000 active African angel investors.

Sounds like a low target for a continent that has hundreds of thousands of entrepreneurs and healthy representation in the diaspora, right? But the operative word here is ‘active’.

The challenge is often getting those with available resources and expertise hooked and interested in the intangible which is how many technology businesses are perceived.

With a keen and more relatable frame of mind towards issues that plague us and their resulting opportunities, we should apply ourselves more towards increasing the local pan-African appetite for technology investments if we hope to see more companies grow, flourish and perchance offer a decent return on the time and capital investment given.