The tech startup space in Africa is exciting because entrepreneurs are forced to think differently and create innovative solutions to local problems, according to Sean Obedih, founder of investment club NewGenAngels.
Obedih founded NewGenAngels in June last year, and since then the investment club has gained 50 members, all African professionals based in the United Kingdom (UK) hailing from the likes of Zimbabwe, Ghana, Kenya, Nigeria, South Africa, Tanzania, Mozambique and Rwanda.
NewGenAngels made investments totalling US$200,000 in three African startups in its first six months, putting US$25,000 into music startup Orin, US$25,000 into online marketplace Kitaal and US$150,000 into a stealth financial technology company.
Obedih told Disrupt Africa he realised while advising founders in the last few years and working with angel investors that African companies were not being looked after properly, so he decided to take matters into his own hands and formed NewGenAngels.
“Angels prefer to invest in syndicates and diversify their portfolio because of the many risks associated with early stage investing,” he said.
“We have been on a global mission to evangelise about the continent and build local capacity by creating bridges between Africa-based angel networks and their European counterparts.”
The club plans to spend 2015 evolving as an organisation, growing its membership and opening an American chapter later this year. It is also hoping to create its first micro fund while activating 1,000 members by 2020.
Obedih says there are many opportunities in the tech sector in Africa, especially in terms of providing services as infrastructure is laid down.
“Technology-enabled businesses are what we focus on simply because we believe that technology is affecting and touching every area of our lives, especially in areas such as healthcare, e-commerce, financial services and infrastructure,” he said.
“My belief is that African governments have so much on their plate that while they are building the physical infrastructure like roads, schools and hospitals, entrepreneurs will build technology infrastructure. So we want to be backing that core group of companies that build the tech infrastructure.”
Obedih said, however, that many African have issues with scale, because they are always advised to “think globally, but act locally”, and idea he disagrees with.
“It sounds great in theory but in practice it is not ideal. You will always hear investors say that they fund people, not ideas, because the best ideas usually come out of trying many things, but most people are afraid to keep trying and failing. Most companies are run by mercenaries and there are very few missionaries who truly care about changing how things work and moving the needle by embracing new business models.”
He also believes there is a lack of understanding of startup culture from policymakers, and how it can benefit their countries.
“There aren’t any think tanks that I know of that are solely campaigning for things like tax breaks for angel investors and actively seeking to affect such policy on a pan-African level,” he said. “This is one of the areas in which we hope to make a difference and we are currently working with some of our partners to create the African Business Angel institute, to be able to help them create policies that are important in creating a vibrant ecosystem.”