Originally started as a LinkedIn group in 2008, VC4Africa, the Africa platform for startup funding, has become the largest online community of entrepreneurs and investors focusing on companies from the African continent. VC4Africa offers an array of services for entrepreneurs and investors, as well as showcases trending ventures, mentorship opportunities, and employment positions. KITE Invest and the Founder of VC4Africa, Ben White, address the trajectories of the platform and investment in Africa.
KITE Invest: Deriving from a LinkedIn group page was there any expectation that VC4Africa would grow into what it has become today?
Ben White: Our goal has always been to build a community of like-minded individuals with the idea we can achieve more working together. Our job is to support our members with a world-class social networking platform needed to effectively connect a global community of knowledge and capital. We see this as a critical step needed to have a healthy ecosystem conducive to Africa innovation, a place where any entrepreneur on the African continent receives a fair chance to bring their ideas to fruition. We calculate there are some 6 million transformational entrepreneurs using the Internet, as a tool to do business so there is plenty of work still to be done.
Note: 20,000 members, 2,500 startups active in 46 African markets, and 600 early stage investors. Venture applications to VC4Africa have grown 640% in three years.
KITE: How has the organic growth played into the development of the network and platform?
BW: I think it is the only way to build a community. We started by connecting people and building a dedicated membership. As this network grew over time we had the opportunity to understand their needs and to respond to those needs with our platforms, programs and services. It’s an iterative process. So every day we are looking for new ways to create value for the members of the VC4Africa community. The platform and organization only exist to support this.
KITE: What are some of the milestones for VC4Africa?
BW: Each of our members has a set of milestones. Our goal is to capture these and to make them effectively available to members who can play a role in achieving them. So we are about networking opportunities, connecting support and demand as it exists across our network. This is our sole focus.
KITE: Remaining challenges?
BW: Despite considerable gains, the ‘missing middle’ problem persists, although narrower than when VC4Africa started in 2007. We know that entrepreneurs have been able to secure venture funding in 26 African countries. Especially in leading markets like Kenya and Nigeria, founders increasingly succeed in raising the first USD 100K from 3Fs and external investors. The challenge now is to reach entrepreneurs operating in other markets. At the same time help the companies grow to a size they become viable prospects for the larger venture capital funds, impact investors and SME financiers. Growing the number of business Angels is key and through our support of ABAN (African Business Angels Network) we work to connect and strengthen angel-investing networks. These are important interfaces for engaging early stage high potential companies, to build up their track records and get them into markets where they can achieve their full potential. Through co-investing opportunities we look at ways to make it easier for high net worth individuals to get involved, and to better connect entrepreneurs with the mentor capital they require.
KITE: What aspirations do you hold for VC4Africa in medium to long term?
BW: It’s about density of networks. Having 1-2 financing options is not enough for entrepreneurs starting out. The more channels they have to tap into the greater number of companies we will see achieve scale as a result. We have been building these networks and channels for 8 years now. We could not be more enthusiastic or optimistic about where we are today. That said, there is still plenty of work to be done.
KITE: VC4Africa provides entrepreneurs access to free online tools, mentorship opportunities and private deal rooms. Over the last 5 + years how has the entrepreneurship community changed overall?
BW: The number of venture applications on VC4Africa.biz has grown 640% in the last three years. More importantly than the increasing number of ventures coming up, is to recognize that their level of seriousness and overall quality continues to improve. The increasing scope of investible opportunities has resulted in an increase in investments. For VC4Africa listed entrepreneurs we tracked USD 12 million invested capital in 2013 and USD 26,9 million in 2014. And the average amount invested per venture increased from USD 130K in 2013 to over USD 200K in 2014. Our data shows 49% of the ventures start generating revenue in their first year of operation while 44% of the ventures are successful in securing external capital investment. Take into consideration that 82% of the investors that took part in the same research have invested in an African based company.
KITE: What makes the African region unique to others – pros and cons?
BW: The massive potential to create impact for 1 billion people, rapidly expanding mobile networks and increasing internet penetration, a growing middle class with increasing spending power, and the continued progress different African countries are making to develop their political, economic and social systems continues to introduce an increasing number of areas where entrepreneurs can make a real difference.
KITE: What efforts does VC4Africa make in regions that have a less vibrant entrepreneur ecosystem?
BW: VC4Africa connects with innovation hubs in 26 African countries. We are constantly working to expand the number of our collaborations. We made a recent visit to Zimbabwe, we are connecting with individuals who want to set up an Angel investing network in Mozambique, Ivory Coast, and Rwanda. A first tech hub has now come online in Malawi and we support the ActivSpaces community in Cameroon. Most recently via our partnership with Orange we have been able to offer our first acceleration program in French, and so our efforts continue.
KITE: VC4Africa has an Investor Pro Account which allows users to set up intelligent alerts, follow progress, conduct due diligence and get in direct contact with entrepreneurs. With your services has VC4Africa seen many entrepreneurs transition to become investors?
BW: Nice question. It’s the unspoken code I suppose. When an entrepreneur is successful they often feel a need to give back to the community, maybe in the same way others helped them come up as entrepreneurs themselves. The ecosystem matures when the current generation of entrepreneurs comes back as the investors of tomorrow. This is the point where we come full circle, and yes you are starting to see the beginnings of that now. Eric Edelstein who exited from Evly, Hilda Moraa who exited Wazetele, Jason Njorku who has received significant funding for Iroko, and the list grows by the day.
KITE: What sectors and industries trends do you foresee occurring?
BW: High potential high growth opportunities. Companies active in the fields of E-Commerce, Clean Technology, Health and Financial Services receive the greatest investor interest. From our research we see the most capital is invested in Kenya, followed by South Africa, Uganda and Nigeria. From the median and average values it can be concluded that investments in South Africa are larger than investments made in Kenya. This might be due to the more mature state of the South African startup space. But within countries we are actually looking at a number of key cities conducive to vibrant startup culture. Nairobi, Lagos, Accra, etc…
KITE: Lastly, are there any upcoming events or matters that you would like to announce or convey?
BW: VC4Africa is partnering with The Dutch Good Growth Fund (DGGF), the Aspen Network of Development Entrepreneurs (ANDE), the East African Venture Capital Association (EAVCA), GroFin, Novastar Ventures, and the African Business Angels Network (ABAN) in hosting the SME Financing forum in Nairobi, Kenya June 8th as part of the activities around the EAVCA Annual Conference. The forum will provide an opportunity for industry stakeholders to engage and share insights on new emerging SME finance initiatives and elaborate on potential solutions to bridge the gap between start up support and full-fledged equity participation.
Our Green Pioneer Accelerator is gearing up for its inaugural graduation that will showcase 21 entrepreneurs. These innovative companies will present to investors and strategic partners at two closed Venture Forums on Tuesday, June 9th in Nairobi, Kenya and on Thursday, June 11th in Cape Town, South Africa. The Green Pioneer Accelerator focused on early stage enterprises contributing innovative solutions to environmental issues such as climate change, energy insecurity, and loss of biodiversity and degradation of ecosystems. Interested investors and others can request to attend the Green Pioneer Accelerator Venture Forums in Nairobi (June 9) and Cape Town (June 11).
VC4Africa is a proud partner of the upcoming Global Entrepreneurship Summit celebrating President Obama’s visit to Kenya. The annual gathering brings together entrepreneurs at all stages of business development, business leaders, mentors, and high-level government officials. This year’s event will be the sixth annual gathering subsequently hosted by the governments of Turkey, the United Arab Emirates, Malaysia, and Morocco.
On Wednesday September 23, we partner with the African Business Angels Network (ABAN), the European Business Angels Network (EBAN), the Lagos Angels Network (LAN) and DEMO Africa to jointly present “The African Opportunity: Angel Investing in Africa” Investor Summit in lead to DEMO Africa 2015 in Lagos, Nigeria. The summit will bring together investors from across the continent as well as from sister investor networks in Europe and the US and will provide an unprecedented opportunity to network with the leading opinion leaders in the early stage investment space, and a unique opportunity for accessing the latest investment methods and best practices from sourcing deals through valuation to exits. Interested investors can register here.