Africa’s Venture Capital panorama faces challenges
Recent years have been a rollercoaster for Africa’s enterprise capital scene. Investments in African startups surged from $1.3 billion to $4 billion between 2019 and 2021.
This was on account of world curiosity and low rates of interest. However, in 2023, investments dropped to $2.27 billion, much like pre-2016 ranges. Eghosa Omoigui from EchoVC shared this perception.
As the funding surroundings undergoes a change, African startups and traders are dealing with a myriad of challenges. Dr. Eleni Z. Gabre-Madhin, Founder of Timbuktoo Africa and former Chief Innovation Officer at UNDP, provides insights into navigating these challenges whereas centering the dialogue on the vital position of enterprise capital in Africa’s tech ecosystem.
Dr. Gabre-Madhin emphasizes the urgency of constructing a strong home funding base to maintain VC inflows, stating, “The most important structural issue is that the base of venture capital in Africa is almost entirely foreign investment.” She highlights the necessity for collaboration between governments and institutional traders to bolster home VC exercise and safeguard towards exterior shocks.
To appeal to and retain enterprise capital funding in the long run, Dr. Gabre-Madhin advocates for a multi-country strategy for tech startups. “One of the most important initiatives… is to mitigate single-country risk by going across borders as soon as possible,” she asserts. By increasing into a number of markets early on, startups can hedge towards country-level points and improve their attractiveness to traders.
