VC Funding: What will become of the other African countries?

I stole this from thebigdeal.substack.com

Why am I concerned?

Well first… what is venture capital?

Venture Capital Enables Innovation

In many developed nations, venture capital is a direct indicator of the level of innovation. VCs have been known to invest in research and development and turn ideas into profitable businesses. Given the current data, one might conclude that there is little to no innovation happening in these regions. How true is this? Are there no great entrepreneurs or innovative ideas in Zimbabwe or Mali? I refuse to believe this. The question becomes, how can we enable innovation and shed light on great ideas that are coming from the less popular countries? A few ideas come to mind:

  • Increase and encourage research and development in educational institutions across African institutions
  • Establish more business incubators and accelerators to prepare founders for private capital
  • Leverage technology to equalize venture capital funding distribution across the continent

Venture Capital Drives Growth

While African VC capital is promised to rise over the years, I am concerned that Africa is missing out on expotential economic growth because of the concentration of capital across the top 4 countries. If there is no conscious effort to enable innovation in other countries and fund them, we risk the creation of monopolized start up hubs that are hard to penetrate. I am not naive to political, social and religious factors that stifle economic growth in many African countries and the uncertainities that VCs must face to find new markets to invest in. However, healthy competition and proper distribution of VC capital across certain countries or regions as innovative ideas come up will promote growth and solve significant problems. Luckily, there are has been increased activity across countries like Ghana, Senegal, Uganda, Tunisia and Tanzania. Moving forward, investors must keep an eye on entrepreneurs in other promising countries like Ethiopia, Zimbabwe, Morroco and Rwanda to fund profitable solutions to pressing problems, create jobs and increase productivity. Ultimately, this will drive the economic growth of these regions.

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Ijeoma Ejimadu

I’m an engineer by trade, entrepreneur by practice and lover of all things Africa. I’m sharing my thoughts on things that I care about the most.