Venture capital: What is it? It refers to the financing, creation, or development of a high-potential, high-risk business in the form of equity investment. It is one of the most common ways for investors to tap into the potential of startups while participating in their growth. While accessing venture capital can already be challenging for European entrepreneurs, the challenge is even greater for African entrepreneurs. Most of these funds have been developed in the Western world and operate with little presence outside that safe zone.

Nevertheless, over the past decade, there has been a notable increase in the amount of venture capital flowing into African startups, reaching $5.2 billion in 2021! [2] And this trend is expected to continue as more and more investors take an interest in African startups.

Angel investment refers to capital provided by wealthy individuals to support a company in exchange for equity ownership. Angel investors (or business angels) provide funding to startups at the idea or concept stage of development. Unlike venture capital, angel investment is typically much more informal and driven by personal initiative. Since angel investors fund early-stage companies, they often play a less active role in the company's operations. Relatively recent on the continent, this type of investment is particularly well-suited for African startups that have no track record or a ready-to-scale prototype.
 

Crowdfunding is becoming an increasingly popular method for entrepreneurs to raise funds. One of the most well-known crowdfunding platforms is Kickstarter, which offers reward-based crowdfunding for participants. People who support a project receive a token of appreciation, such as a T-shirt or a voucher, in exchange for their funding. Kickstarter is now available in many African countries. Crowdfunding is also accessible on the African continent through equity crowdfunding platforms. In equity crowdfunding, investors receive a percentage of the company in exchange for their funding. While still a recent phenomenon in Africa, most platforms on the continent only accept companies at early stages of devel

Some of the world's largest companies have started investing in African startups. This is often done through corporate venture capital funds, which invest in startups focusing on solving specific industry problems. These funds are often led by entrepreneurs who have previously worked for the investment company. For example, IBM launched a venture capital fund/accelerator in Africa called "IBM Hyper Protect Accelerator," focusing on investing in artificial intelligence and data science startups. [2] Many corporations fund startups in Africa because they want to address common challenges in their industry, such as agriculture or supply chain management. They also invest in startups to access new technologies and innovations that can enhance their competitiveness.  compétitivité. 
 

Sovereign wealth funds are investment funds owned by governments and designed to invest in foreign assets to diversify their countries' economies. Some of the world's largest sovereign wealth funds have started investing in African tech startups because there are numerous promising companies on the continent.

References:

[1]

Tchounand, Ristel. "Finance: Le Boom Du Capital-Risque Sur Le Continent Africain." La Tribune, 12 May 2021, afrique.latribune.fr/finances/investissement/2022-05-12/finance-le-boom-du-capital-risque-sur-le-continent-africain-917678.html#:~:text=Sur%20la%20seule%20ann%C3%A9e%202021. Accessed 11 Sept. 2022.

[2]

"Current Programs. IBM Hyper Protect Accelerator • Village Capital." Vilcap.com, vilcap.com/current-programs/ibm-hyper-protect-accele

 “Current Programs . IBM Hyper Protect Accelerator • Village Capital.” Vilcap.com, vilcap.com/current-programs/ibm-hyper-protect-accelerator. Accessed 25 Sept. 2022.

Sitographie

- Tchounand, Ristel. “Finance : Le Boom Du Capital-Risque Sur Le Continent Africain.” La Tribune, 12 May 2021, afrique.latribune.fr/finances/investissement/2022-05-12/finance-le-boom-du-capital-risque-sur-le-continent-africain-917678.html#:~:text=Sur%20la%20seule%20ann%C3%A9e%202021.
Accessed 11 Sept. 2022. [2]

- “Current Programs . IBM Hyper Protect Accelerator • Village Capital.” Vilcap.com, vilcap.com/current-programs/ibm-hyper-protect-accelerator. Accessed 25 Sept. 2022.