Insights on Investing in African Startups 🚀
In our recent video, Yvonne Bajela and Nimmy Mathews share their insights on what investors look for when investing in African startups, and much more.
In our latest deep dive into the world of African startups, we had the privilege of hearing from two industry powerhouses: Yvonne Bajela of LocalGlobe and Nimmy Mathews of Amazon Web Services. Their fireside chat at #AfroTechFest provided invaluable insights into the complexities, challenges, and immense potential of the African startup ecosystem.
The Current State of African Startups
While the African startup scene is bursting with innovation, the funding landscape remains challenging:
Less than 3% of global VC funding goes to female founders
For black female founders, it's less than 1%
In Africa, the numbers are even smaller
Yvonne candidly described the data as "very depressing," noting that the numbers continue to decline. However, there's a silver lining. Nimmy pointed out that 20% of funded startups in Africa have at least one female founder, compared to just 5% in Europe.
"Africa has something to teach Europe as well," Nimmy remarked, offering a glimmer of hope in an otherwise challenging landscape.
Challenges and Opportunities
Bajela, drawing from her experience since 2015, highlighted several key points:
The ecosystem is still young, with most investments less than a decade old
Exits are starting to happen, but patience is crucial
There's a need for more local funds to support Series A and beyond
Unconscious bias plays a significant role in investment decisions
Both of them emphasized the importance of addressing unconscious bias in investment decisions and increasing representation in VC firms. Yvonne noted:
"As an investor, you will relate more to those who look like you and come from a similar background. If you look at all those with check-writing capabilities, they tend to be white males."
Advice for Founders
For aspiring entrepreneurs in Africa, Yvonne and Nimmy offered valuable insights:
Build confidence: Female founders often underestimate their potential compared to male counterparts
Focus on scalable solutions: Think beyond local markets
Leverage technology: Use innovative approaches to overcome infrastructure challenges
Network relentlessly: Seek mentorship and build strong connections
Develop a deep understanding of your market and its unique challenges
Be adaptable while staying true to your core mission
Looking Ahead
Despite the challenges, both Yvonne and Nimmy are optimistic about the future of African startups. They envision:
Increased representation in investment decision-making roles
More startup-friendly policies across African nations
Stronger connections between African startups and global markets
Growth of local sources of capital
Development of more exit opportunities for investors
The message is clear: while the road may be tough, the potential for impact and success in the African startup ecosystem is immense. As Yvonne put it:
"I have the privilege of working with some incredible female founders on a daily basis."
This optimism, coupled with strategic action and support, could pave the way for a more inclusive and thriving startup ecosystem in Africa.
Watch the full video here