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Women, in particular, can benefit from the increased number of angel investors who fill the gap between the concept and income on the African continent. This is magnified when women become angel investors.
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Epic Games, Uber, Juul Labs, Leap Magic, Instacart, Katerra, Opendoor and Lyft share many common traits. As you might have guessed, these are US-based, male-run, venture-backed technology companies. What you may not have understood is that each of them has attracted individually more venture capital over the past year than what has been invested in the past year. ######################################################################### 39, the whole African continent in 2017. The first three, Epic Games, Juul Labs and Uber each generated $ 1.2 billion, more than double the amount of venture capital invested in Africa.
Africa-based venture capital firms have experienced substantial growth over the past three years. 41% of the 22 funds based in Africa have been trained since 2016. & nbsp; The announcement of the Jumia IPO has sparked worldwide interest in "African" startups. There is now more start-up capital available in sub-Saharan Africa than a few years ago, but this capital does not come from sources that really matter for start-ups.
Africa needs more angels.
Angel investors invest their own money in startup startups. This is even more true in communities where "friends and family" have neither the wealth nor the expertise to invest in startups. Angels play a key role in financing the business, from the design stage to revenue generation. They are particularly critical for women in these communities who need to overcome a "proof of concept" attracting institutional capital. Although it is difficult to determine the total amount of dollars invested by angels in Africa, it is clearly not important enough. In 2018, $ 133.5 million of venture capital has been invested in Nigeria, the continent's leading destination for venture capital investment behind South Africa. In the same year, the Lagos Angel Network, the continent's most active angel investment network, invested only $ 1.5 million.
Startups lament the lack of capital to launch them. Venture capitalists say they would invest more in Africa if only more viable companies were planned. A strong angel network would solve both of these problems by serving as a bridge between the startup idea and the growing business. And by building this bridge, angel investors can help entrepreneurs deliver on their promise as a youth job generator and innovative local solutions to local problems.
Africa does not lack wealthy individuals (HNI). According to South Africa Activity Reportthere are more than 40,000 millionaires in South Africa. Nigeria leads the world in the growth of millionaires. It is expected that the the number of millionaires will increase by 16.3% every year until 2023. & nbsp; There are two main reasons why these HNIs do not invest in startups. First, they do not understand the asset class. In the United States, where more than $ 24 billion was invested by angel investors last year, 6 of the 10 richest people have been successful with technology. The richest man in Africa, Aliko Dangote, made a fortune in cement. Among the 10 richest people on the continent, only one has made a fortune in spaces adjacent to technology. The wealth of Naguib Sawiris comes from the telecommunications sector.
Second, there are stable returns to be made elsewhere. Nigerian treasury bills outperformed the average annual growth of the US stock market and new high-rise luxury housing projects in Accra promise annual returns of 17.5%. So why would you want to invest in an unproven technology market where outings, if they happen, are known to take years?
Angel investments could be more catalytic than the & nbsp; institutional capital & nbsp; Institutional Framework for the Entrepreneurship Ecosystem in Sub-Saharan Africa. Angels tend to invest in a wider geographical area. Search for & nbsp;Wharton Entrepreneurship and Angel Capital Association has shown that in the United States, 45% of all venture capital dollars are invested in San Francisco, New York and Boston, while only 37% of angel dollars are invested in these same three cities. & nbsp; Similarly, in Africa, most capital is invested in Johannesburg, Cape Town, Lagos and Nairobi. HNIs that invest in the field in Abidjan, Accra, Gaborone and Kampala would bring capital to second-tier investment markets, creating successes and development opportunities for larger funds.
Second, angels can be more patient with their funding. Venture capital fund managers have a specific date when they have to return capital to their investors. It's no secret that things can take longer than expected in Africa. The founders do not just start their business, they also develop the technological, financial and talent infrastructure they need to grow. Since angels invest their own money, they are not subject to the same time constraints as institutional investors and can stay in touch with a contractor to create a market.
Angel Investing is not for everyone. Although angels' returns are higher than those of other traditional investment areas, they are also riskier. & Nbsp; Angel investing is an area in which your returns improve as you gain experience and diversify a portfolio. These two things take time in an emerging ecosystem. Investors need to be comfortable with potential returns of -100% in the short term. But if an individual can tolerate this risk, the financial and social return will be greater than any other available instrument.
The private and public sectors both have a role to play in accelerating the development of angel investment. HNIs exposed to startups must promote angel investments in their networks. There is a lot to learn from organizations like Seeds of gold in the United States to improve women's understanding and participation in angel investment. Rising tide, Africa& nbsp; in Nigeria, replicates the model for the region.
Second, the government should provide tax incentives to make investment in angel investment more attractive. In South Africa, Section 12J of the Income Tax Act allows investing in funds that invest in small businesses and are 100% deductible. The combination of education and incentives could significantly increase the number of HNI investments invested in startups, allowing more investable companies to acquire larger venture capital funds and eventually an investment ecosystem in which no American company would attract more capital than the entire African continent in a year.
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Women, in particular, can benefit from the increased number of angel investors who fill the gap between the concept and income on the African continent. This is magnified when women become angel investors.
Getty
Epic Games, Uber, Juul Labs, Leap Magic, Instacart, Katerra, Opendoor and Lyft share many common traits. As you might have guessed, these are US-based, male-run, venture-backed technology companies. What you may not have understood is that each of them has attracted individually more venture capital over the past year than what has been invested in the past year. ######################################################################### 39, the whole African continent in 2017. The first three, Epic Games, Juul Labs and Uber each generated $ 1.2 billion, more than double the amount of venture capital invested in Africa.
Africa-based venture capital firms have experienced substantial growth over the past three years. 41% of the 22 funds based in Africa have been trained since 2016. The announcement of the Jumia IPO has sparked the world's interest in "African" startups and there are certainly more start-up capital available today in sub-Saharan Africa as it was a few years ago, but this capital does not come from sources that really matter for start-up start-ups.
Africa needs more angels.
Angel investors invest their own money in startup startups. This is even more true in communities where "friends and family" have neither the wealth nor the expertise to invest in startups. Angels play a key role in financing the business, from the design stage to revenue generation. They are particularly critical for women in these communities who have to overcome a superior "proof of concept" to attract institutional capital. Although it is difficult to determine the total amount of dollars invested by angels in Africa, it is clearly not important enough. In 2018, $ 133.5 million of venture capital was invested in Nigeria, the continent's leading destination for venture capital investment behind South Africa. In the same year, the Lagos Angel Network, the continent's most active angel investment network, invested only $ 1.5 million.
Startups lament the lack of capital to launch them. Venture capitalists say they would invest more in Africa if only more viable companies were planned. A strong angel network would solve both of these problems by serving as a bridge between the startup idea and the growing business. And by building this bridge, angel investors can help entrepreneurs deliver on their promise as a youth job generator and innovative local solutions to local problems.
Africa does not lack wealthy individuals (HNI). According to South Africa Activity Reportthere are more than 40,000 millionaires in South Africa. Nigeria leads the world in the growth of millionaires. The number of millionaires is expected to increase by 16.3% per year by 2023. There are two main reasons why these HNIs do not invest in startups. First, they do not understand the asset class. In the United States, where more than $ 24 billion was invested by angel investors last year, 6 of the 10 richest people made their fortune through technology. Africa's richest man, Aliko Dangote, made a fortune in cement. Among the 10 richest people on the continent, only one has made a fortune in spaces adjacent to technology. The wealth of Naguib Sawiris comes from the telecommunications sector.
Second, there are stable returns to be made elsewhere. Nigerian treasury bills outperformed the average annual growth of the US stock market and new high-rise luxury housing projects in Accra promise annual returns of 17.5%. So why would you want to invest in an unproven technology market where outings, if they happen, are known to take years?
Angel investment could be more catalytic than institutional venture capital for the ecosystem of entrepreneurship in sub-Saharan Africa. Angels tend to invest in a wider geographical area. Search for Wharton Entrepreneurship and Angel Capital Association have shown that in the United States, 45% of all venture capital dollars are invested in San Francisco, New York and Boston, while only 37% of all angel dollars are invested in these same three cities. Similarly, in Africa, most capital is invested in Johannesburg, Cape Town, Lagos and Nairobi. HNIs that invest in the field in Abidjan, Accra, Gaborone and Kampala would bring capital to second-tier investment markets, creating successes and development opportunities for larger funds.
Second, angels can be more patient with their funding. Venture capital fund managers have a specific date when they have to return capital to their investors. It's no secret that things can take longer than expected in Africa. The founders do not just start their business, they also develop the technological, financial and talent infrastructure they need to grow. Since angels invest their own money, they are not subject to the same time constraints as institutional investors and can stay in touch with a contractor to create a market.
Angel Investing is not for everyone. Although angels' returns are higher than those of other traditional investment areas, they are also riskier. Angel investment is an area in which your returns improve as you gain more experience and diversify a portfolio. These two things take time in an emerging ecosystem. Investors need to be comfortable with potential returns of -100% in the short term. But if an individual can tolerate this risk, the financial and social return will be greater than any other available instrument.
The private and public sectors both have a role to play in accelerating the development of angel investment. HNIs exposed to startups must promote angel investments in their networks. In the United States, many organizations such as Golden Seeds are responsible for improving women's understanding and participation in angel investment. Rising Tide Africa in Nigeria replicates the model for the region.
Second, the government should provide tax incentives to make investment in angel investment more attractive. In South Africa, Section 12J of the Income Tax Act allows investing in funds that invest in small businesses and are 100% deductible. The combination of education and incentives could significantly increase the number of HNI investments invested in startups, allowing more investable companies to acquire larger venture capital funds and eventually an investment ecosystem in which no American company would attract more capital than the entire African continent in a year.
