VC Market in Africa
Venture capital firms desire to invest in startup or emerging companies which have the potential of making a large profit. The VC firm will offer a substantial investment in the company and in return they will have equity. Efraim Landa is a venture capitalist who will work hand in hand with a company and offer his expertise to them so that they can experience more growth and profits. The goal of a VC firm is to bring valuation to a company until the company is able to make its initial public offering. (IPO) These practices have been in operation for many decades and have in recent years begun to stretch out across markets in regions around the world. Many underdeveloped regions have made huge strides in progress over the last few years and Africa is among them.
The History of VC in Africa
Africa has been behind most of the world in its development of technology. Since this has been one of the main areas that VC firms like to invest in, this has meant a slow start for African venture capital. Slowly private associations started providing VC for new business projects in the African region. GDP in Africa that comes from VC investments is still below 2% in most of Africa and it’s been a slow growth to get to that point. But at the rate that the region is growing it should begin to close the gap at a much faster rate. As the region experienced solid growth over the last few years, the market is up and there are more venture capital firms as well as angel investors looking to invest in the region which is set to grow in the future.
Present State of VC in Africa
Africa is experiencing a very fertile business landscape presently and most of these have been able to move up through the initial startup phases due to some involvement of venture capital firms. Startups need the capital in order to grow and the VC desires to partner with prospering companies that have shown they have the capacity to bring in a huge return. While Africa is beginning to be very attractive to the VC firms there is still a lot of work that is necessary to promote business ventures on the continent. There are some African venture capital firms that have the desire to take advantage of the present market; but companies from other regions are also eager to get in on the African market especially in some of the high growth sectors like ICT and telecommunications. Most of the firms that do business with Africa or Africans are affiliated with some of the region’s regulatory bodies such as the African Venture Capital Association and the South African VC Association. They have been able to establish healthy investment portfolios. There are presently approximately 400 investors which have been set up just to help startup companies in the region.
Future of VC in Africa
One of the areas that is expected to experience much growth in the not too distant future is mobile phones. Some Africans are getting their first taste of the internet through mobile devices. This is expected to lead directly into the migration of tablets and laptops. It is expected that investors will be willing to invest in technology for the advancement of the African region. The region is experiencing a middle class that is growing astronomically and this interprets into plenty of investment opportunities for long term businesses. Large investments are more than likely coming for the continent to encourage competitive advantages in the long term.