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Venture Capital Firms in Africa Top 5

Venture Capital Firms in Africa: Top 5

Venture Capital firms in Africa are setting their sites all over. This is large because of the significant growth of up to 80% in the establishment and development of tech startups and small businesses in Africa. 

A venture capital firm is a kind of private equity firm that invests in a small business or startup that has the potential of achieving market acceptance and growth. These investors provide funds in exchange for equity.  This means that the money startups receive from Venture capital firms in Africa is used to purchase an amount of ownership in that startup or business.

These investments usually come from investment banks, wealthy investors, and other kinds of financial institutions that are in the business of investments

A lot more than a Regular Investor

Companies new and old are constantly looking for ways to expand and grow their business and to do so they need funds. Venture capital firms in Africa can provide these funds. But they don’t do so to just any company irrespective of how healthy it is or high and frequent its dividends are.

It is all based on a strategy for not all VC companies actually produce a profit. VCs buy a percentage of ownership of the companies only with the intention to later sell it for up to 50 times the original investment price. 

Before VCs can invest in a company, it must have the real promise of growth, have a strong and dedicated management team and they have to make beyond excellent sales in service or product. But outside these, VCs look for unique companies, especially those who offer something new and very different to the market. 

About every three years or so, VCs can rack up to millions and billions of dollars. These funds come from large organizations like insurance companies, pension funds, top organizations, and sometimes extremely wealthy people. It is with the money collected that Venture Capital invests in startups that show high possibilities of growth and business that are upcoming. 

Venture Capital is always after making more money than they invested. This is why they are likely to keep up with a startup or business financially. This means that seed round funding may be in the works for the company. Should the business perform excellently, a ‘series A’ funding would follow up which should further assist the business in its growth plans. 

The more a business grows the more interested its investors are in it. And as such would want to put more money into it. This is where a ‘series B’ and a ‘series C’ funding comes in. And the higher the amounts invested, the higher the risk. So, VCs are usually very careful about whose mouth they put their money in.

The Top Five Venture Capital Firms in Africa

Africa has a lot of investment firms that have their eyes out for dynamic and unique business all over Africa that shows the promise of returns greater than their investments. And amongst all these firms five companies have proven to be exceptional and reliable.

Here are the top five VCs in Africa;

  1. Vantage Capital

Vantage capital funds and management is a venture capital firm that was founded in 2001 and is located in Capetown, South Africa. And since 2006, it has made significant investment impacts by having made 27 investments into startups and small businesses in Africa. 

It started business in 2001 by launching its technology fund where $19 million was invested in at least ten companies that go from new businesses/startups to already listed companies. 

Vantage Capital is the largest mezzanine fund manager and has so far raised funds of over $1.1 billion and since 2006, its Mezzanine division has made 31 investments across many kinds of funds into African countries.

It is rated the largest and most experienced independent mezzanine funder on the continent. Their portfolio contains over 20 investment projects that are being funded by them. 

Some of which are; Pickabatros hotels and resorts, CIM Sante health care, Ally Roads, Petro Ivoire, EquityInvest, Tamarin, and many more  

  1. Adlevo Capital

Adlevo capital is a firm based in Mauritius that was established in 2007. This private equity firm is focused on investing in technologically based companies that are located across Sub-Saharan Africa. 

The Adlevo team looks to invest in startups and small businesses with strong management teams, large market opportunities, consumer-driven growth, and product uniqueness. 

The firm’s portfolio’s companies include; Interswitch, Rancard holdings limited, and Solo Phone Holdings Limited.

  1. MBO

MBO Capital Management is a private equity and venture capital firm that is based in Lagos, Nigeria, and was founded in 2012.

MBO Capital is a private equity firm based in Africa that funds/invest in small to medium-sized companies in Nigeria and the rest of Anglophone West Africa to provide efficient and sustainable social and financial returns. 

They provide early-stage and expansion capital to startups and companies that want to accelerate the growth of the company. They are currently invested in Shoprite, FCSL Asset management, AfyAcare, Sterling Realties, Sterling Virtual Offices, and Inkblot Productions. 

  1. Savannah Fund

This is a seed capital fund that specializes in US$50,000- US$1,000,000 investments that are in their early stages in development. These funds go to technology-based startups which are mostly mobile and web that are in Sub-Saharan Africa. 

They have extensive investment experiences with startup tech companies and have even managed successful incubations projects that exist all over Africa. They have and are still assisting startups to succeed all over Africa and aim to link these startups with the rest of the world

Since 2012, they have made over 30 investments all over Africa that are focussed on startups in countries like Uganda, Kenya, Nigeria, South Africa, and so on. 

And in turn, these startups have raised more than 200M in seed/venture capital funds which have led to the generation of over 1000 jobs. Savannah fund’s investments include; ACE, Aerobotics, Binu, Lidya, Orbit health and more

  1. Convergence Partners 

Convergence partners were founded in 2006 as an investment management firm that is based and focused on Africa. They are known for increasing the value of ICT assets as well as creating new investment opportunities.

They are a private equity funds manager and have an existing portfolio across 18 countries in Africa. They are involved in ICT infrastructure, private equity, venture capital, and social venture capital all of which they pour their time, experience, services, and resources into. 

They invest in projects and small businesses that are specifically developed to maximize the impact of ICT in Africa. 

They work with startups that are mostly into ICT and telecommunication development. Their partners include but are not limited to; Vodacom, Nedbank, Telkom, Venture garden, Jabil, Vuma, Channel VAS, and so on.

The Main Importance of Venture Capital Firms 

The main advantage of venture capital financing is the opportunity for company expansion that would not have been achieved except through loans from banks or other methods/financial institutions. 

And because startups have little or no operating history and high costs, the investors carry the investment risk because they are most interested in the growth and success of the company. But apart from their financial involvement, they also provide expertise gained from their years of experience and advice to further help the startup move forward.

The Best VC Firm for your Startup or Small Business in Africa

Startups and small businesses are constantly looking for venture capital firms, angel investors, and private equity investors to finance their businesses. And how to meet and present their business and what it is about to investors and how to even pick the right VC firms to meet. 

Africa is a continent filled with several countries that are not only diverse in culture and language but also in-laws, government policies, and foreign/local policies and because of this, a venture capital firm that works across Africa and with startups. 

They would need a middle ground a company that navigates through these policies and create an enabling environment that would be both beneficial to the small business looking for investment and the VCs looking to provide the funding In 2019, Africa experienced a large amount of VC startup investments, making Africa the continent with the most investments for that year. Some of these tech startups and small businesses went as far as receiving seed funding, series A, B funding respectively.

 It is because of these very reasons that Shikana legal and Investment Advisory group comes to assist both VC and the startup enjoy the best of their investment environment and Shikana’s years of experience.

They would years of gathered information use it to come up with the best strategies to assist both the VC and the startup move the enterprise to the right market that it would be accepted in and grow.

Conclusion

In 2019, Africa experienced a large amount of VC startup investments, making Africa the continent with the most investments for that year. Some of these tech startups and small businesses went as far as receiving seed funding, series A, B funding respectively.

From fintech creations and further development to tech innovations and its fast-paced advancements in Africa has led the world to believe that Africa is now the hub of tech startups and small businesses opportunities. 

It is the fast growth that has led Private equity firms and VC firms from outside and within Africa to invest largely in Africa’s start-up companies and small businesses.

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