Angel Investors In Africa

Africa recently has been numbered among the locations for entrepreneurial transactions, because of its many potential resources.

Considering its increasing population and the younger generation numbering higher, technology innovation, Africa is being transformed economically.

Majorly, having access to capital to maximize the possibilities available in the continent, has been a challenge to many and at this point, Angel investors are often considered.

Angel investors; mostly considered to be the surest options for new or upcoming business, plays an important role in encouraging new ideas, supporting entrepreneurship, also in return leading to economic expansion across Africa.

Why are they given the name ”Angel Investors”, and of what importance are they to the Africa’s growing entrepreneurial market? These and many more will be discussed as we go further, also the impact they create across the continent of Africa.

What is an Angel Investor?

An angel investor is described as a typically high net worth individual who supports startups and upcoming entrepreneurs financially, mostly in exchange for equity ownership or convertible debt.

Unlike venture capitalists, who most times manage pooled funds and invest a higher amount, angel investors usually pull theirs through personal finances, concentrating more on the early stage businesses that are in need of funds or startup capital.

Apart from providing capital, angel investors also play other roles. These roles often include bringing valuable industry experience, mentorship, and networking, aiding the entrepreneurs overcome the challenging terrain of developing a business. 

For many startups in Africa, encountering an angel investor can be a breakthrough that determines the difference between success and failure.

The Roles of Angel Investors in Africa

Angel investors play an important function in funding new business through venture capital, thereby easing the stress from the popular financing concept of loans from banks which is mostly not accessible by many.

Africa’s startup system is progressively increasing, as many entrepreneurs are still not finding it easy to secure the desired capital to measure up their businesses.

This is where angel investors comes in, filling the funding gap and providing the necessary support for innovative ideas to record progress.

Angel investors have the ability to handle the risk in investment, which in turn is an additional advantage compared to that of the traditional investors.

Startups in Africa, particularly those in the early stages, are often known to be facing challenges, some of which arising from political influence, infrastructure deficiency, and changes in policy. Angel investors, regardless, display the will-power to take a chance on these ventures because they see the potential for high returns on investment, both financially and social impact.

More-so, many angel investors in the continent do not just place their emphasis on making profit, but are also motivated by the desire to contribute to the continent’s transformation with every opportunity available.

They prefer to support businesses that have the potential to meet pressing social and economic challenges, such as unemployment, poverty, access to education, good healthcare and other basic amenities. These they do regardless of Africa’s unique challenges.

Angel Investors Network In Africa:

Networking among Angel investors has been sharply increasing in Africa. Purpose for this form of networking is to bring together investors in their groups for the purpose of pooling their knowledge in investing in a new venture.

In addition, This action helps in assisting investors to diversify their portfolio by utilizing coming together global strategies, minimizing risks and even building networks.

Most countries in Africa have remarkable angel investors networks which have evolved with each of them having a significant role to play in promoting new enterprises alongside creativity.

Among these networks are:

• Africa Business Angel Network
• Lions’ Den
• Angel Investment Network
• Venture Capital for Africa

• Africa Business Angel Network (ABAN): 

ABAN is a pan-African organization that focuses on projecting and assisting angel investing all over Africa. 

Among the investors, it also encourages connectivity and partnership for the achievement of common goals.

As part of ABAN’s contribution to entrepreneurship, they advocate for flexibility in policy formation and enlighten the citizens about the advantages of angel investors.

• Lions’ Den: 

Rooted in Eastern Africa, Lions’ Den is also an angel investment group that unites experienced investors who have passion for supporting startups around their locality. 

Here they have specific sectors such as agribusiness, healthcare, technology, and have recorded notably progress among potential startups in the region.

• Angel Investment Network (AIN):

AIN isn’t limited to Africa, but is a global network with a large presence also in Africa. 

Usually they link the entrepreneurs with the investor through an online connectivity, making it more flexible for the both parties (Angel investors and the entrepreneurs) to connect. AIN has recorded great success in many sectors all over Africa.

• Venture Capital for Africa (VC4A): 

VC4A is not limited to networking  like others, although it still plays the role partly. Here, they provide entrepreneurs with access to Mentoring, needed resources, funding opportunities and has been a tool for growth in Africa’s startups structures.

Notable Angel Investors in Africa

Africa’s startup businesses are filled with gifted entrepreneurs, most of which their success story had the presence of Angel investors who supported them and in turn made it a reality.

Some notable angel investors in Africa includes;

1. Tomi Davies
2. Rebecca Enonchong
3. Iyinoluwa Aboyeji
4. Kola Aina

• Tomi Davies: 

Tomi Davies a prominent figure in the African tech industry. A co-founder of ABAN who has invested in some of the many startups in Africa. 

Having so much passion for the tech industry, his assets spread across other sectors like healthcare, edtech and Fintech.

• Rebecca Enonchong: 

Focus specifically on tech entrepreneurs who is also angel investor. Rebecca Enonchong is the founder of AppsTech, which is a popular name in enterprise software for problem solving. 

concentrating on funding tech and social influence startups, she has been an active advocate for entrepreneurs.

• Iyinoluwa Aboyeji: 

One of the co-founders of Flutterwave, who is a popular name among Fintech companies in Africa, is making impart  both as angel investor and entrepreneurship.

As an active angel investor with a long history, he has recorded his presence in the success of startups from different sectors like education, healthcare and Fintech.

• Kola Aina: 

The initiator of Ventures Platform, a venture capital funder, who partners with startups across Africa. kola Aina as an angel investor, has been a part of many successful startups, among them are Paystack, a Fintech company in Africa.

These and many others, have contributed in redefining Africa’s startups, as well as strengthening innovation and entrepreneurship across Africa.

The Impact of Angel Investors on African Startups

Financially, their contributions have been the backbone to many early-stage startups in recording success, although some of their involvement goes beyond just funding. 

Oftentimes, Angel investors take an active role in guiding and mentoring entrepreneurs, thereby helping them scale through the challenges of building a successful business in Africa’s multidimensional market.

Patterning with Angel investors, possibilities of startups recording success in the process are high.

Based on a certain report by the African Private Equity and Venture Capital Association (AVCA), 

Organizations that receive angel investment are in a vantage point to attract follow on funding and support from venture capitalists as well other institutional investors.

This is because angel investors pave the way to credible validation for startups with potential.

Moreover, angel investor’s activities contribute to jobs creation in it’s thousands and by extension economic development. 

By supporting startups that are championing innovation in different sectors such as agriculture, healthcare, education, fintech, etc,. This goes as far as addressing some of the continent’s most pressing needs. 

Challenges Facing Angel Investors in Africa

While the promises for a better Africa through Angel investors is high, Challenges often limits it’s manifestations.

One of the limitations is the lack of its mature and well established angel investing presence in many African countries, as compared to the developed markets, where the activities of angel investing is a well understood.

Many African investors are still unfamiliar with how it works, as a result draw back from investing due to possible risk factors.

Another challenge is concerning regulatory policies. In many African countries, the legal and regulatory policies are not  favorable for such investment. For instance, there may be limited protection for investors, unstable tax policies, and the non flexibility processes for establishing businesses and transferring ownership stakes if need be. 

All these can stall potential angel investors and render it impossible for startups to attract funding.

The Sustainability of Angel Investment in Africa

As more companies record progress and the awareness of the potential profits from investing in African startups increases, many investors are likely associate.

The rise of angel networks and platforms like VC4A is also a good place to start as it helps in addressing some of the challenges by funding investors with the support, resources, and connections they need per time.

Moreover, there’s been changes adopted by governments and policymakers in the continent forwards recognizing the advantages of encouraging entrepreneurship and innovation.

Countries are taking steps to better the regulatory policy for angel investing, by minimizing tax, offering incentives, softening some policies so startups can access capitals.

Conclusion

Angel investors in Africa are not just playing the role of  financiers; they pattern with dreams  and innovation by making them become achievable results, and are considered catalysts for economic development. 

Playing a major role in remodeling Africa, and as the startup business environment continues to mature, their influence keeps growing and stronger. 

For entrepreneurs with creativity,  and investors with the mindset to exploit, in Africa there’s a chance for everyone.