The growing number of startups securing major financial commitments, sets the stage for an entirely new era of growth in the African venture capital industry. This was the most discussed topic during the sixth edition of the Africa Early Stage Investor Summit #AESIS2019 held between 13-15 November in Cape Town, South Africa.
Growing interest from foreign investors – including an increasing number of Chinese investors – , startup valuations becoming too high, entrepreneurs increasingly looking to international markets and the question if local entrepreneurs are really benefiting from the influx of funding, were highlighted across a rapid series of panels, keynotes, fireside chats and roundtables across the three day event, that marks the 6th year VC4A and ABAN organize the Africa Early Stage Investor Summit.
Lessons learned from investing in the continent’s top businesses
Industry leaders challenged these topics while sharing insights and lessons learned from investing in the continent’s top businesses. At #AESIS2019, participants dove head-first into these and many more startup ecosystem topics with African powerhouses like Pieter de Villiers, Eghosa Omoigui, Keet van Zyl, Rebecca Enonchong, Ido Sum, Lauren Cochran, Tomi Davies, Marième Diop, Johann Choux, Paul Cook, Yassine Oussaifi, Llew Claasen, Abu Bakr Cassim, Olivier Furdelle, Khaled Ismail, Ben White, David van Dijk and many others, leading the conversations.
The 2019 event comprised 3 days of rich content and networking activities including new components this year such as a full-day Fund Manager Training and curated speed-dating sessions between Limited Partners and General Partners. Both of which were oversubscribed. The first day of the Summit also included the first Annual General Meeting for the African Business Angels Network (ABAN) as efforts continue to spur angel investing across the continent and to unlock resources for starting companies at their earliest stages of development.
Co-organizers, ABAN and VC4A, welcomed 330 investors representing Africa’s early stage investing ecosystem. The Summit attracted the highest ever number of early stage African investors from 35 different countries representing 110+ investor organizations, funds, family foundations and business angel networks. The motivation? To bring together leading investors from Africa and beyond to network, exchange insights, create partnerships and make deals.
Key takeaways from the Summit include:
- The number of women (co-)founders are on the rise at 18% in 2019
- Africa’s startup ecosystem, as of 2018, is on par with Southeast Asia’s of 2014, with major increase in early-stage investing expected
- Ecosystem actors need to stop looking to Silicon Valley and create own ecosystem model and path for growthAfrican startups create social impact but investing for profit remains leading driver for investor participation
- Fund managers and investors need to play the long game to reap any returns while there is a need for more fund managers to enter the industry
Creating pipeline through VC4A’s Venture Showcase – Series A
#AESIS2019 wouldn’t be complete without co-organizer’s VC4A Venture Showcase that featured 12 vetted Series A-ready companies from Egypt and Algeria to Nigeria and South Africa. Their solutions range from VR therapy to more efficient transport to an easy cashback app, and more. The Showcase simultaneously helps build pipeline for some investors and create exists for others, propelling the African startup ecosystem forward. Several past Showcase ventures currently appear on the list of companies that raised more than USD 1 million in 2019, with FlexClub from the 2019 Showcase making an appearance as well. In addition, the 2018 alumni Nawah Scientific and the 2019 participant LifeBank, have just been announced the winners of the Jack Ma Netpreneur Prize. Altogether, VC4A’s Venture Showcase companies have raised more than USD 36 million to date.
Announcing launch of Catalyst, a fund-matching mechanism for angels
Rebecca Enonchong, female founder and treasurer of the African Business Angels Network (ABAN) announced the Catalyst initiative to summit attendees. The initiative, in partnership with Afrilabs and funded by the AFD will stimulate angel investing across the continent by matching investments up to EUR 60K. She adds: “This mechanism helps build layers in the ecosystem and creates more pipeline for investors since angels will be able to invest in more businesses.”
Everyone at the Summit agreed that Africa’s startup ecosystem is maturing. To-date in 2019, over USD 1 billion has been raised with 83 deals alone exceeding USD1M and with 18% of those companies co-founded by women. “More women than in Silicon Valley,” as VC4A’s Ben White pointed out in his opening keynote. However, as anyone present at #AESIS2019 could sense, the hunger and energy to do better and to do more is mighty. With the quick adoption of Netflix across the continent, as Rebecca Enonchong highlighted to the amusement of all in the audience, the potential is endless. The key to ecosystem growth and success? Treat Africans as consumers, like anyone else.