Creating linkages in Africa’s investment space


More linkages are required within the African tech space both to encourage more investment and ensure startups that do raise funding are better served by their investors.

That was the key takeaway from a breakout session focused on angel investing at the Africa Tech Summit Kigali, which took place last week.

Last year was a record-breaking one when it came to funding raised by African tech startups, yet there is still a need for more investors at all levels. This is especially the case when it comes to angel investors, with dozens of angel groups forming across the continent under the general banner of the African Business Angel Network (ABAN).

Building linkages is especially crucial when it comes to angel investing, with angel groups designed to allow people to co-invest in startups and learn from one another. Collins Onuegbu is partner at one of the original such groups, the Lagos Angel Network (LAN), and he said getting enough people involved was the most basic challenge.

“Initially we couldn’t get traction because we didn’t have enough members. We needed to build enough capacity to allow us to invest,” he said.

The solution for LAN was setting up syndicates to invest in startups.

“Doing that allowed us to expand our base. What we have done as LAN itself is still a work in progress. We are using syndicates to expand our capacity,” Onuegbu said.

“We have a secretariat that has helped us build the structure that we need. It helps us link up with the startups and the pipelines.”

NewGenAngels founder Sean Obedih has identified the need for another linkage: one between African startups and Africans in the diaspora.

“There’s a big part of the African population that lives outside of Africa. Everyone talks about the diaspora sending money back home, but nobody talks about what that is being used for. There is no infrastructure for channelling it into companies,” he said. “That infrastructure to invest in things is what is required more than the money.”

Ravi Sikand, senior partner of VC firm Energy Access Ventures, said both angel investors and VC firms had a key part to play in the African investment space, and needed to work together.

“Entrepreneurs have ideas, and they need early-stage capital to prove the concept. That’s where angels come in, they add real value to the entrepreneurs. The VCs, when they come in, the relationship is added value,” he said.

“As the next set of investors come in, they want to see the first lot still committed. It breeds a lot of confidence.”

How these two different types of investors work together once a startup has obtained VC funding is also crucial, however.

“The important thing is to ensure the company still maintains a lot of flexibility. The relationship between the VC and the angels is about ensuring that works,” Sikand said.

“As we invest in companies the group of investors needs to be coordinated. We don’t want 10 different investors firing off 10 different questions each day.”


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Passionate about the vibrant tech startups scene in Africa, Tom can usually be found sniffing out the continent's most exciting new companies and entrepreneurs, funding rounds and any other developments within the growing ecosystem.

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