Quick snippets from our morning read on Wednesday, 14th April 2021
In today’s morning read we look at the African business angel investment market. The article written by Sean Ndiho Obedih breaks down a few points on how to develop this market.
It is no longer a myth that there are economic opportunities to be found in Africa and this is very true when it comes to angel investment opportunities because of simply the supply and demand issue. Just look at these 8 British entrepreneurs that are building great businesses in Africa.
UK is home to a population of over 5 million Africans and at least 10000 professionals could easily be doing Angel investing yet this hasn’t been the case so far. As mentioned in my previous post we need to foster a new generation of professional angel investing with a new attitude towards opportunities that are available across Africa. So over 7 months ago I set up NewGenAngels UK’s first angel investment network focusing on Africa, a few weeks later i unveiled it to the public at the Business in Africa conference held at Judge Business school in Cambridge where i had been invited to speak on Entrepreneurship and Innovation in Africa.
I started out this process by asking a question on Quora What does it take to run a super successful angel syndicate or angel investment fund? Dave McLure the founder of US based Accelerator 500 Startups responded with these facts:
- Enough money (to write checks)
- Good branding / good dealflow (to see good deals)
- Selection intelligence (to choose good deals)
- Valuation sensitivity / negotiation expertise (for reasonable prices)
- Document execution & financial/legal support (to get deals done)
- Some domain of expertise / access to mentors (to help co’s win)
- Connections to downstream capital (to help co’s get next round)
- Connections to buyers (to help co’s find an exit)
- Patience (to wait until they exit)
Angel investing is the most significant source of investment in start up and early stage businesses seeking equity to grow their business. Whilst the market is relatively difficult to calculate since many Business Angels are investing privately, an estimated £850m per annum is invested by angels annually in the UK alone. This is more than 2.5x the amount of Venture Capital invested in early stage small businesses annually according to UKBAA (UK Business Angel Association). The largest Angel investment market is of the USA leading at $24B invested in 2013 with $700M going into technology firms. This is an indication of how substantial the African Business Angel market could be one day.
This is something that is very close to my heart and the work that we have done over the past 7 months have been a great validation that this is worthwhile doing and doing well. In August we supported Homestring’s Africa Diaspora Investment Symposium , in September we were involved in StartupAfricaLDN and recently DiasporaDemoDay held at the world bank in Washington DC.
NewGenAngels is an exclusive investment club for sophisticated investors investing over £15,000 in high growth private Africa focused companies seeking £150,000 to £1500000 in equity funding. This is usually too large for local angels or micro lending and too small for Venture capital or Private equity.
We provide handpicked opportunities with strong management teams and a proven track record.We also provide online data rooms to easily view the full range of documentation prior to closing the investment. We focus on scale-ups instead of start-ups but most importantly creating an economic and social impact.
NewGenAngels is a member of European Business Angels Network (EBAN) and work very closely with the UKBAA UK Business Angel Association.
Read the rest of the article and how NewGenAngels works here.
And as always, if you enjoyed this, check out the rest of our daily snippets, curated daily, right here on The Red Notebook.
