Early-Stage Startup Investment in Africa

Published 11 May 2023
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As we have reported previously, Africa’s technology start-ups experienced a record year in 2021. Cashing in big increases in both deal volume and the number of funding rounds. But has this success been mirrored across all funding stages? And what can early-stage founders learn from the success of later-stage technology companies that hit the headlines?

With Egypt and Nigeria leading the way in early-stage funding in 2021, start-ups in Morocco, Ghana and Uganda also closed a number of early-stage funding rounds. We also saw significant growth in sectors such as e-commerce and online retail. But has growth been consistent across all sectors?

In partnership with TechCabal Insights and Future Africa, we have comissioned a report on early-stage investing in Africa. The report explores the value and size of early-stage deals over the past five years and further probes the data across multiple sectors and countries. We also bring you expert insight from early-stage investors across the continent to better understand Africa’s early-stage investment landscape. The key learnings are outlined in the report and make the following recommendations:

  1. Founders should build what matters and believe in their solution as much as they want investors to believe in it.
  2. Early-stage investors should first look into the quality of the founders before the idea they are presenting because a good product in the hands of a bad founder or team will most eventually fail. Great founders, even when they fail, find it easy to pivot and move into something more important.
  3. Early-stage investment is exactly what it is; an investment. Investment is simply taking a calculated risk. Investors should, therefore, not wear out founders in the due diligence process by overly asking for requirements that take the founder’s attention away from building the solution. Once the important requirements are provided, decisions should be made and communicated on time.
  4. Networking is an important skill that every founder should have. A prominent investor we interviewed told us it is a skill they look for in the founders as it shows the ability to reach out for help when there’s a problem. The great thing for founders who do not have it is that it can be learned and imbibed over time.

Find out more in the report. Check out the full report here.