Angel investor

Editor’s note: This post was contributed by Sean Ndiho Obedih, founding partner of Sobek Ventures Holdings and New Gen Angels.

Organised Angel investing is a crucial part of any vibrant entrepreneurial ecosystem because Angel investors usually fund the initial stages of fledgling businesses before any venture capital or institutional investors come in. It is fair to say that the family friends and Fools Avenue isn’t really a viable option to the vast majority of African entrepreneurs.

So who are angel investors? The definition of angel investing has evolved over the years but they are typically entrepreneurs themselves or professionals such as accountants, lawyers, doctors and consultants. One key differentiation between Angel investors and venture capitalists is that they are investing their own hard-earned cash into your company rather than that of institutional investors. They usually invest from $5000 but they range between $25,000 and $250,000.

The most recent survey regarding Africa on this topic was recently done by the VC4Africa and they found very interesting facts such as 71% of investors are aged between 30-50 with 12% being younger than 30. On average 40% have a 5-10 years experience however 35% are also new and have less than 5 years of working on the African continent.

They also found that 34% of the investors are angels, 28% are VC Firms and 17% are part of a social impact fund; the rest are accelerators, Govt institutions and NGOs.

In terms of geographical spread, these investors are from N.America, Europe, Middle East and Africa. Investors in Africa are also becoming active in countries such as Ghana, Rwanda, Kenya, South Africa, Nigeria, Tanzania, Ethiopia, Egypt and Mauritius. They were interested in sectors such as 65% in ICT, 41% in financial services, 28% in Health care and Education. They found that 32% typically invested $25000-$100000 while 21% invested $100K-$500K while 31% can invest $500K and above.

There has been an increase in number of angel syndicates and a new breed of the so called Super Angels who are investing cash as well offering extensive business support. The creation of active angel investing networks such as Angel Africa List, Ghana Angel Investor Network, Lagos Angel Network, Africa Angel Network, NewGenAngels and Cairo Angels is a fantastic development and events such as Angel Fair Africa is a big step forward to creating a fantastic and vibrant angel investing ecosystem. Things are certainly looking up for this ecosystem.

Regulation needs to be improved and Governments should look to create incentives such SEIS (Seed Enterprise Investment Scheme) in the UK to provide tax relief and help mitigate the risks for the angel investors. We have compiled a list of the most active Angel Networks and other early stage funds here. Feel free to add to this list.

In conclusion VC4Africa are organising the first pan African angel Investor summit to look at the future of Angel Investing in Africa in conjunction with DemoAfrica. See more details here.

The Cabal Author

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