Developing a vibrant African business angel investment market.
It is no longer a myth that there are economic opportunities to be found in Africa and this is very true when it comes to angel investment opportunities because of simply the supply and demand issue. Just look at these 8 British entrepreneurs that are building great businesses in Africa.
UK is home to a population of over 5 million Africans and at least 10000 professionals could easily be doing Angel investing yet this hasn’t been the case so far. As mentioned in my previous post we need to foster a new generation of professional angel investing with a new attitude towards opportunities that are available across Africa. So over 7 months ago I set up NewGenAngels UK’s first angel investment network focusing on Africa, a few weeks later i unveiled it to the public at the Business in Africa conference held at Judge Business school in Cambridge where i had been invited to speak on Entrepreneurship and Innovation in Africa.
I started out this process by asking a question on Quora What does it take to run a super successful angel syndicate or angel investment fund? Dave McLure the founder of US based Accelerator 500 Startups responded with these facts:
1) enough money (to write checks)
2) good branding / good dealflow (to see good deals)
3) selection intelligence (to choose good deals)
4) valuation sensitivity / negotiation expertise (for reasonable prices)
5) document execution & financial/legal support (to get deals done)
6) some domain of expertise / access to mentors (to help co’s win)
7) connections to downstream capital (to help co’s get next round)
8) connections to buyers (to help co’s find an exit)
9) patience (to wait until they exit)
Angel investing is the most significant source of investment in start up and early stage businesses seeking equity to grow their business. Whilst the market is relatively difficult to calculate since many Business Angels are investing privately, an estimated £850m per annum is invested by angels annually in the UK alone. This is more than 2.5x the amount of Venture Capital invested in early stage small businesses annually according to UKBAA (UK Business Angel Association). The largest Angel investment market is of the USA leading at $24B invested in 2013 with $700M going into technology firms. This is an indication of how substantial the African Business Angel market could be one day.
This is something that is very close to my heart and the work that we have done over the past 7 months have been a great validation that this is worthwhile doing and doing well. In August we supported Homestring’s Africa Diaspora Investment Symposium , in September we were involved in StartupAfricaLDN and recently DiasporaDemoDay held at the world bank in Washington DC.
NewGenAngels is an exclusive investment club for sophisticated investors investing over £15,000 in high growth private Africa focused companies seeking £150,000 to £1500000 in equity funding. This is usually too large for local angels or micro lending and too small for Venture capital or Private equity.
We provide handpicked opportunities with strong management teams and a proven track record.We also provide online data rooms to easily view the full range of documentation prior to closing the investment. We focus on scale-ups instead of start-ups but most importantly creating an economic and social impact.
NewGenAngels is a member of European Business Angels Network (EBAN) and work very closely with the UKBAA UK Business Angel Association.
HOW IT WORKS
We introduce deals to our investors through a number of channels including but not limited to:
Investment Dinner Clubs.
Small gatherings of 20 investors each month. Sessions focus on a particular sector or topic, and we may introduce external speakers. Some of our previous speakers have been experienced UK Angel Investors and Heads of accelerators.
Investment Bulletin
An interactive bulletin will be distributed by email every month listing current investment opportunities across many sectors.
One-off Placements :We know some of our investors like to be sent interesting proposals directly.
We have interesting plans ahead including an angel cofund vehicle to invest alongside angel networks and syndicates across Europe,USA, Africa or through our partners like GAIN (Ghana Angel Investment Network) and Africa Angel Network (AAN).
W e are also very excited by the recent creation of ABAN (Africa Business Angel Network) and look forward to working with everyone in 2015 and beyond.
Unlike other groups we don’t take any % of the funds raised, we believe that entrepreneurs are always taken advantage of and we have heard many horror stories and we aim to stop these bad practices.
We have introduced a flexible membership structure for Individual Investors, Angel groups and corporations looking for strategic investments. We look forward to working with you in creating a vibrant market that supports and produces high growth businesses that can compete on a global scale. Crowdfunding will also play a vital role in the development of this vibrant market and platforms such as the recently launched Emerging Crowd is a great sign that fantastic steps are being taken by the right people who share our passion for progress and profit.
This is not a myth or blind fantasy, Africa is certainly open for business and investors are taking note, Rocket Internet backed Jumia recently raised $150M and is now valued at $550M ,we have seen prominent European and US investors like Tim Draper invest in African companies such as Paga or companies such as Voguepay a Nigerian payment processing company moving to Level39 in London’s Canary wharf or the Nigerian-Finnish company Irofit securing a $600K investment from Angel investors based in Finland and Ghana based messaging company Saya acquired by a US company ; MPESA the Kenyan mobile money phenomenal success which was seed funded by DFID and Vodafone with £2M in 2007 recently launched in Europe and i expect many more African brands to follow suit in the next few years. UK investors can register here and International investors can reach us through our email at Info@newgenangels.com
In conclusion,here is a video of the talk i gave at Imperial College on the investment and exit opportunities in Africa.
Originally published at www.linkedin.com on November 26, 2014.
