“Impact” versus “returns-driven” investing in Africa


2017 was the best year on record for African tech startups in funding terms, with 159 companies from across the continent securing a combined total of US$195 million.

This is according to the latest Disrupt Africa African Tech Startups Funding Report, which tells a very positive story of the continent’s increasing appeal to investors.

But who are these investors? They are, in fact, a diverse bunch. But what is clear is that the traditional boundaries between “impact” and “returns-focused” are becoming more and more blurred, with the argument that all investments in Africa are “impact investments” gaining traction and impact firms increasingly as returns-driven as traditional VCs.

“The impact investing landscape has broadened in recent years to include funds with a range of definitions of  impact and financial returns,” Amee Parbhoo, director of investments at impact firm Accion, told Disrupt Africa.

“At Accion Venture Lab, we continue to seek and support companies that can drive social impact and achieve financial returns, and we continue to see other early-stage equity investors in Africa focusing on this double bottom line.”

Many “impact” investors argue there is little difference between them and those deemed “in it for the money”. Parbhoo says there is increasing collaboration between the two types of

“Accion Venture Lab is focused exclusively on providing seed-stage capital and support to fintech startups creating better access, better quality or lower cost of financial services for the underserved,” she said.  

“Our portfolio companies in Africa are developing scalable solutions focused on these underserved populations. To that end, we find co-investors who share our excitement for innovative solutions and who maintain similar objectives of impact and scalability.”

She said seed capital was still difficult to raise in many African markets, meaning there was a need for those active in the space to work together.

“We find early-stage funds particularly collaborative – sharing pipeline information, providing insights, and working collaboratively with a company once an investment has been made to help it succeed,” she said.

The shift in thinking has been felt on the startup side as well. Onyeka Akumah is chief executive officer (CEO) of Nigerian agri-tech startup Farmcrowdy, a for-profit business with undeniable impact that was one of the 159 African tech startups to secure funding last year.

He says one key transformation the company has seen with impact-driven companies is the element of return.

“Today, Farmcrowdy operates an impact and return model that speaks to both doing good while doing well. This makes a good case for both impact-focused and return-focused investors to have both sides of the coin when investing in businesses like ours,” Akumah said.

“Social impact today can have an element of a business that will allow us to continue the work of changing the lives of people we work with while earning a decent return for our investors too. That said, we need all parties involved for the right reason, making the world a better place.”

Though Akumah’s last point may not quite be the reality yet, the increasing blurring of the lines between investing for impact and investing for return, coupled with the trend towards such firms and individuals co-investing in startups, can only be good news for the continent’s tech space.


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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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