Africa-focused venture capital funds now welcome co-investment partners from around the world

For global venture capitalists still hesitant to enter the African market, a first step could be co-investing with a proven fund that has already established itself in the region. Africa’s startup scene may not have achieved significant milestones yet, but there are promising returns for investors who get in early.

Table of Contents

Africa: A Land of Opportunity

Africa is home to one of the fastest-growing tech sectors globally, driven by a massive mobilization of capital towards African startups around a continent-wide value proposition for tech. Significant economic growth and reform in major commercial hubs such as Nigeria, Kenya, Ghana, and Ethiopia are fueling the formalization of informal sectors like logistics, finance, retail, and mobility.

Demographics Favoring Growth

Africa boasts one of the world’s fastest-growing youth populations, with rapid smartphone adoption and internet penetration. This demographic landscape presents a plethora of opportunities for tech-enabled companies. Accurately measuring venture funding for Africa is an ongoing challenge, but reliable estimates indicate that it has grown from approximately $400 million in 2014 to over $2 billion by 2019.

Partner-Friendly Africa Funds

The growth of VC for Africa has been accompanied by the emergence of partner-friendly funds. These funds are open to collaborating with global partners and offer a gateway for venture capitalists looking to enter the African market. Some notable examples include:

Dakar Network Angels: A seed-fund focused on startups in French-speaking Africa, welcoming co-investors.
CRE Venture Capital: Managed by Pule Taukobong and Pardon Makumbe, with a portfolio that includes Andela and FlexClub.

Why Partner with Proven Funds?

Partnering with proven funds offers several benefits for global venture capitalists:

Reduced Risk: Co-investing with experienced funds helps mitigate risks associated with entering an unfamiliar market.
Access to Local Expertise: Partnering with local funds provides valuable insights and knowledge about the African market, increasing the chances of success.
Shared Knowledge and Resources: Collaborating with other investors can lead to a sharing of expertise, networks, and resources.

Conclusion

Co-investing with proven funds is a smart move for global venture capitalists looking to tap into Africa’s growing tech sector. By partnering with experienced funds, they can reduce risks, access local expertise, and share knowledge and resources. As the African market continues to grow, it’s essential for investors to be strategic in their approach.

Appendix

Jake Bright – Contributing Writer at TechCrunch
The Next Africa (Macmillan 2015) – Jake Bright’s first book on the rise of Africa’s venture-backed startup scene