You have an excellent idea for a business start-up. However, raising capital or funding is the issue. This is where venture capitalists come in. One of the best ways to get funding is through venture capital because you are under no obligation to pay back the capital even when your business fails.
Foreign VCs are at the forefront of investing in African companies. However, many African VCs are coming up and are supporting start-ups in Africa. Nigerian startups have also witnessed the huge imapcts of VCs, these startups are becoming unicorns that can invest in other businesses.
What is Venture Capital?
Venture Capital (VC) is a type of long-term financing given to small businesses or start-ups in return for equity in the company. In short, VCs are capital funding investors provide to start-ups with high potential growth in return for a profit when the business makes it big. The funding comes from wealthy investors, investment banks, and specialised VC funds.
The investment is not necessarily financial but can also be through mentorship or manpower. These investors are called venture capitalists. Venture Capitalists in a VC firm are employees of a risk capital company.
Venture capitalists “bear the excessive financial risk and provide guidance to startups to attain their objectives.”
In return for taking this kind of risk, the investors take 50% ownership, or less, in the company they invested in. VC firms get their funding from wealthy investors and partners.
While on the other hand, angel investors are wealthy individuals willing to financially fund a start-up business with an interesting idea with potential without getting equity in the company in return.
There are several types of VC funding, namely;
- Seed Funding (given at the initial stage of setting up the company)
- Start-up Capital – given after completion of the seed stage to help create a product prototype, hire important management personnel, etc.
- First Stage – provided to business with an already existing product and wants to start commercialising it.
- Expansion Funding – this is funding provided to a business to expand its operations.
- Late Stage Funding – funding provided to a business that has successfully achieved commercial manufacturing and sales but without profit.
- Bridge Funding – this kind of funding helps a business to meet its short-term expenses of creating an initial public offering (IPO).
Now that you know what VCs are and how they work, let’s look at the top 10 venture capitals in Africa where you can get funding.
Top 10 Venture Capitals in Africa
Gold Venture Capital Limited (GVCL)
GVCL is a successful venture capitalist located in Ghana. It is a limited liability firm founded under the laws of the Ghana Republic and is owned by the Venture Capitals Trust Fund and the Gold Coast Securities Limited.
GVCL specialises in funding businesses in sectors such as agribusiness, healthcare, manufacturing and industrials, education, and many more in West African countries. Boulders Advisory Limited manages the company. GVCL invested in Viamax, a digital media company.
Vantage Capital was founded in 2001 in Cape Town, South Africa. This is one of the oldest venture capital firms in Africa that is still operational. Vantage Capital does not have many investments or big-sized cheques, but it is one of the most impactful VC firms Africa has ever seen.
In its first year of operation, it distributed a $19million technology fund to different start-ups, with some businesses becoming listed companies. In addition, the firm provides capital funds to different industries.
The firm’s portfolio includes Bonyan Development and Trade, COLLINS Residential, equity invest, Maryland mall (Lagos, Nigeria), United Africa Group, and Pretoria Towers.
The firm was founded in 2016 by Kola Aina and is based in Abuja, Nigeria. Venture Platform provides capital funds to agriculture, health, insurance, technology, and many more businesses.
The firm’s investments include printivo, paystack, RelianceHMO, Trove, and Bata.
Founded in 2006, Convergence Partners is an investment management firm focused on the technology, media and telecom sector. The firm uses its skills, experience and capital “to accelerate communications access and ICT infrastructure development on the Continent.”
Convergence Partners has around 38 investments with two acquisitions in its portfolio. These investments include companies like BriteHouse, GAMEZBOOST, NEDBANK, Telkom, and Vodacom.
Fusion Capital is part of the Fusion Group of businesses based in London, UK, and operates in Africa. The firm operates as a hybrid business financing and private equity company focusing on East and Central Africa local businesses. Fusion Capital.
It invests in service businesses, real estate developments and manufacturing. The firm operates in Nairo, Dar es Salaam, Kigali and Rwanda.
Some start-ups funded by Fusion Capital include Nakupoly Printers Limited, San Valencia Limited, Thika Farmers Group and Gal Banking Services.
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Unique Venture Capital Management Company Limited
Unique Venture was established in 2004 by five major banks in Nigeria. The firm is a Small and Medium Enterprises (SME) focused private venture capital investment firm. Unique venture was named the best venture capital firm in Nigeria in 2007 by the Central Bank of Nigeria.
In addition, the firm was selected by the World Bank/International Finance Corporation (IFC) as the fund manager for the IFC SME West African Ventures for Sierra Leone and Liberia.
Unique venture’s portfolio includes Wheel Bound Ltd, Hillcrest Farms, Clear Essence Spa, Emperor Chopsticks, Lets Go Bowling, Stalex Foods, and Bankers Warehouse, to mention a few.
Adlevo is a venture capitalist based in Mauritius. The firm believes that for Sub-Saharan Africa to develop significantly, there is a need to incorporate technology into business processes across all sectors of the economy.
Therefore, the sole investment of Adlevo is in the “development and exploitation of technology or technology-driven processes in Sub-Saharan Africa.”
Adlevo funded businesses such as Interswitch Limited, Pagatech Holdings Limited, Solo Phone Holdings, Greystone, and Rancard Solutions Holdings Limited.
This firm invests in start-up businesses in North Africa and the Middle East. Sawari‘s focus is early and growth stages of start-ups and invests in businesses such as technology-operated media, eCommerce, telecommunications and financial services.
In addition, the firm specialises in technology-driven services such as mobile device content and applications.
Some start-ups the firm has funded include Almentor.net, Elves, ExpandCart, Hawaya, Instabug, and MoneyFellows.
Lead Path Nigeria
Lead Path is a seed capital funding firm that provides medium-sized start-ups with short, medium and long-term funding. They focus on high-end technology businesses such as software, web, and mobile technologies.
Lead Path does not only provide funding, but it also provides a “mentorship and enabling environment” to technology entrepreneurs. Companies in Lead’s portfolio include Paystack, Piggyvest and PushCV, to mention a few.
Investment AB Kinnevik
This venture capital firm is based in Sweden but has a 7% investment in Africa. Kinnevik has shares in Millicom – a company that operates in 13 upcoming markets, including Africa.
The firm has investments in Iroko Partners, a Nigerian media and entertainment firm. Some companies funded by Kinnevik are HungryPanda, budbee, babylon, VillageMD, jointacademy, and simple feast.
Getting funding for your business/idea is challenging when you do not know where to begin or do not have the network. Although the VC industry in Africa is not as strong as that of the developed world, some African-based VC firms are investing in startups within Africa.
These VC firms are not what you see or read on the daily news medium. Therefore they are not well known to many people.
Now that you know that such firms exist, you have a chance to get that business idea up and running or give it the expansion it needs to compete in the global market.
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My name is Ihsan Dantata. I have a bachelor's degree in Information Technology and a master's degree in Information Technology management.
I love to read! I've had a passion for reading books since I was young, which has continued into my adult years.
Currently, I am a hands-on homemaker with a side hustle making the best salads and drinks.