A crop of investors allocating capital to early stage-startups is emerging in Africa. They deploy funding in a way that traditional and commercial lenders cannot. They tend to be patient in nature and their lending requirements are not strict.They are individuals who typically provide financial and non-financial support, including equity or debt funding, mentorship and access to business networks for small businesses, or startups, in exchange for potential future returns.
Murima asserts that the availability of capital at early stages, which is what many angels unlock, is always a good indicator that the ecosystem is moving in a good direction, but he insists that market dynamics are somewhat the main determinant of startup success.Angels in Africa invest predominantly in technology entrepreneurs who are innovating for finance, agriculture, education, healthcare, commerce, clean energy, as well as entertainment, and supply and logistics.
According to ABAN's 2023 Angel Investment Survey, angels who invested in Africa last year used their own money, with 36 per cent generated from their salaries and 29 per cent from their wealth.Majority of angels who invest on the continent, or 60 per cent to be precise, prefer investing in the form of equity. In other words, they invest to acquire stakes in ventures where they deploy capital.
Fadilah Tchoumba, CEO of African Business Angel Network , is convinced that legal frameworks also present potential for African investors to manage risk perception.
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