The Case for Venture Capital in Africa: 10 Lessons from an Early-Stage VC – Iyin Aboyeji
2 min Read November 17, 2023 at 9:46 AM UTC
Daba recently had the honor of speaking with Iyin Aboyeji, Founding Partner of Future Africa, about the immense opportunities for venture capital investments across Africa. As one of the continent’s foremost early-stage startup investors, Iyin shared invaluable insights from his experiences investing in over 100 startups in Africa.
In this blog post, I’ll be covering the top 10 lessons for investors looking to tap into Africa’s vast startup and venture capital potential:
#1 Partner with Experienced Africa VC Fund Managers
Partnering with seasoned Africa-focused venture capital fund managers can greatly boost individual investor outcomes. Their localization expertise and superior access to the continent’s most high-potential startup deals are invaluable.
#2 Embrace a Long-Term Mindset
Adopt a long-term mindset fitting of Africa’s nascent but rapidly developing venture capital ecosystems. Similar to Silicon Valley in the 1970s, patience is vital.
#3 Contrarian Thinking Uncovers Outliers
Avoid consensus group-think. Contrarian thinking and swimming against the tide is key to uncovering outlier startup opportunities across Africa’s 54 diverse countries.
#4 Evaluating Market Opportunity is Paramount
Carefully evaluating the addressable market opportunity and problem-solving potential is even more important than strength of team or product.
#5 Build Strong Founder Relationships
Developing close relationships with and serving as trusted advisors to African startup founders is crucial to VC investment success.
#6 Co-Invest Strategically With Connected Peers
Co-investing alongside well-connected, Africa-focused peers can provide deal flow and follow-on financing access.
#7 Leverage Corporate Ties
Leverage corporate ties on the continent to help portfolio startups secure those critical first reference customers and scale more quickly.
#8 Conduct Extensive Due Diligence
Be highly selective and conduct extensive due diligence, drawing from localized African market insights and context.
#9 Adapt Your Investment Approach
Continuously adapt your investment approach, diversifying or concentrating capital as necessitated by changing African economic landscapes.
#10 Remain Returns Focused
Stay focused on driving strong returns, which attracts further capital inflows from LPs and builds credibility in African VC as an asset class.
In summary, prudent venture capital investing in Africa requires vision, patience, relationships, regulatory know-how, and investment strategy agility. Follow these key lessons from pioneers like Iyin Aboyeji to successfully participate in Africa’s vast long-term growth story.
You can view the full discussion here https://www.youtube.com/live/-Tx6wRjV0UU?si=3TZ03PjxJg2Wy4mc
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