There are many reasons to invest, however investors should be aware that Africa can test their patience. The African markets are volatile and time horizons don’t always work. Even sophisticated companies may need to re-evaluate their business plans, as Nestle did in 21 African countries last year. Many countries also have deficits. It will take bold and resourceful investors to plug these gaps and bring greater prosperity to Africans.
The $71 million TLcom Capital’s TIDE Africa Fund
The latest venture by TLcom Capital was closed at $71 million. The fund’s predecessor shut down in January of last year. TLcom, Bio, CDC Group, and Sango Capital contributed five million dollars. The fund’s first investment was in 12 tech companies in Kenya, Nigeria, companies and South Africa. TIDE Africa II will concentrate on East African fintech firms. The investment firm also has offices in Nigeria and Kenya. The portfolio of TLcom includes Twiga Foods and Andela as along with uLesson and Kobo360. Each company is worth between $500,000 to $10 million.
TLcom is founded in Nairobi, is a VC company is home to more than $200 million under control. The firm’s Managing Partner, Omobola Johnson, has helped launch over dozen tech-related companies across the continent which include Twiga Foods and a trucking logistics company. The investment firm’s team includes Omobola Johnson, a former Nigerian minister of technology and communication.
TIDE Africa is an equity fund that invests in growing-stage tech companies in SSA. It will invest between $500,000 and $10 million in early stage companies with a focus on Series A and B rounds. The fund will be focused on Anglophone Africa but it plans to invest in Eastern and Southern African countries. In Kenya for instance, TIDE has invested in five companies that are growing rapidly in the digital sector.
Omidyar Network’s $71 million TEEP Fund
The Omidyar Network is a US-based charitable investment firm that hopes to invest $100-$200 million in India in the next five years. Pierre Omidyar, co-founder of eBay created the fund and has invested $113 million in 35 Indian companies. In India the fund invests in consumer internet, entrepreneurship, financial inclusion, transparency in government property rights, as well as companies with a social impact.
The Omidyar Network’s TEEP Fund makes investments that are specifically designed to improve access to government information. It is a way to identify non-profits using technology to build public information portals as well as tools for citizens. The network believes that having access to government data increases public knowledge about government processes and contributes to an engaged society that ensures that government officials are accountable. Imaginable Futures will use the funds to invest in for-profit and non-profit companies that focus on healthcare and education.
Raise
If you’re looking to raise money for your African business, you must consider a firm with an emphasis on Africa. One of these companies is TLcom Capital, a fund management company based in London. Its African investments have attracted the attention of angel investors, and the team has raised funds in Nigeria and investors looking for entrepreneurs Kenya. TLcom recently announced the launch of a brand new $71 million fund, which aims to invest in 12 startups before they achieve revenue.
The attraction of Africa venture capital is being recognized by the capital markets. Private investors are increasingly realizing the potential for Africa’s growth and don’t have to be limited by institutional investors. This means that raising funds is never easier. Raise helps businesses close deals in a fraction of the time and is devoid from the restrictions of institutions. But there’s no one right method of raising funds for African investors.
The first step is to know the way investors view African investments. While YC hype is appealing to investors of all kinds however, it is important to consider more than the Silicon Valley giant and Agenda 2063 of the African Union. As a result, African entrepreneurs are seeking the YC signal before they approach US investors. Kyane Kassiri, a Tunisian venture capitalist, has recently discussed the importance of the YC signal when it comes to raising money for African investors.
GetEquity
In July 2021, GetEquity is a Nigeria-based investment platform aimed at democratizing startup funding in Africa. It aims to make financing African startups easy for the average person by providing the best capital raising tools available to any startup. The platform has already helped startups raise over $150,000 from a variety of investors. It also provides secondary markets for investors to buy tokens from other investors.
Contrary to equity crowdfunding, investing in early-stage companies can be a very exclusive activity. It’s typically only available to the most prominent individuals angel investors, capital institutions and syndicates. It’s not often available to friends and family. However, new companies are working to change this privilege by democratizing access to startup funding in Africa. The platform is accessible on iOS and Android devices and is completely free to use.
The GetEquity’s cryptocurrency-based wallet is open to investors. This makes it possible to invest in startups from Africa. With the help of crypto-based funds, investors can invest in African startups starting at just $10. Although this is a small amount, it’s still a significant amount of when compared to traditional equity financing. With the recent departure of Paystack by Spark Capital, GetEquity has become a formidable platform for investors who are willing to invest in Africa.
Bamboo
Bamboo’s first challenge is convincing young Africans to invest in the platform. Until now investors in Africa were limited to a few limited options which included foreign direct investments (FDI) and crowdfunding and traditional finance companies. About a third of Africans have made a purchase on any platform. The company is now saying it is expanding into other African countries, with plans to launch in Ghana in April 2021. More than 50,000 Ghanaians are on the waiting list as of this writing.
Africans have limited alternatives for saving money. With inflation running at nearly 16% and the currency depreciating against the dollar. It is beneficial to invest in dollars to protect against the effects of inflation and a declining currency. Bamboo is a platform that has seen rapid growth in the last two years, is one platform that lets Africans invest in U.S. stock options. Bamboo is set to launch in Ghana in April 2021 and already has more than 50,000 people waiting to be able to access.
Investors can fund their wallets as early at $20 once they are registered. You can fund your account using credit cards, bank transfers, or payment cards. In the future, company funding options users can trade stocks and ETFs, and receive regular market updates. As Bamboo’s platform is secure at the bank level and dependable, it can be utilized by anyone in Africa who can provide an authentic Nigerian Bank Verification Number. Professional investment advisors may also utilize Bamboo’s services.
Chaka
Nigeria is a major hub for legitimate business and investment. The film and entertainment industry in Nigeria is one of the largest in Africa. The country’s expanding fintech industry has led to an increase in startup formations and VC activity. One of the most prominent supporters of Chaka, Iyinoluwa Aboyeji, told TechCrunch that the country’s progressive developments will eventually open doors to a brand new group of investors. Chaka also received seed-funds from Microtraction, which is managed by Michael Seibel, CEO of Y Combinator.
The weakening relationship between the US and China has accelerated Beijing’s interest in African investments. Rising anti-China sentiments and the trade war have made it more appealing to investors to invest in African businesses outside of the US. The African continent is home to large, developing economies, however, the majority of markets are too small to support venture-sized businesses. The founders of companies in Africa must be ready to adopt an expansionist mindset and be locked in a consistent expansion story.
The Central Securities Clearing System oversees the Nigerian Stock Exchange, making it a safe and secure platform to invest in African stocks. Chaka is free to join and has a 0.5% commission on every trade. Withdrawals of available cash can take up to 12 hours. On the other hand, withdrawals of sold shares can take up to three working days. In both instances, the cash for sold shares is settled locally.
Rise
Africa is enjoying positive developments due to the increasing number of investors who are willing to invest. Its economy is stable, and its governance is sound, which attracts foreign investors. This has led to a rise in living standards in Africa. However, Africa is still a risky investment area and investors should exercise caution and due diligence. There are many opportunities to invest in Africa. However Africa needs to improve its offerings to attract foreign capital. African governments must work together to create a more hospitable environment for business and improve the business environment in the next few years.
The United States is more willing to invest in the economies of Africa via foreign direct investment. In 2013, U.S. governments helped to develop a major healthcare financing facility in Senegal. The U.S. government also helped secure investment in cutting-edge technologies in Africa, and helped pharmacies in Kenya and Nigeria have access to high-quality medicines. This type of investment could create jobs and create long-term partnerships between the U.S. and Africa.
There are numerous opportunities available on the African stock exchange. However, it is essential to know the market and perform your due diligence to avoid losing money. If you are a small investor, companies it’s a smart idea to invest in an exchange traded fund (ETFs) that track a wide range of Sub-Saharan African businesses. For U.S. investors, American depositary receipts (ADRs) are a convenient method to trade African stocks in the U.S. stock market.
