African Founders as Investors: A List of Those Transitioning to VC

Just days before the outbreak of the Coronavirus in 2020, Nigerian fintech startup Carbon announced the rollout of a $100,000 pan-African fund for startups. According to the company, the Carbon Disrupt Fund was established to address the lack of funding and support hindering budding tech entrepreneurs on the continent. It aimed to invest up to $10,000 per startup in exchange for a 5% equity stake. Founded by entrepreneurs Ngozi Dozie and Chijioke Dozie of fintech startup Carbon, the initiative was expected to ignite collaboration and drive further investment, fostering growth across the ecosystem.

However, Carbon was not the pioneer in this regard. A significant number of other African tech entrepreneurs have embarked on similar paths. Below, we endeavor to compile a nearly comprehensive list of them.

Download a copy of the list here

Exploring the Factors Behind the Increase in Founder-to-Investors Transition in Africa

During the interval from 2010–2019, there was a notable surge in the number of African founders transitioning into investors, reflecting a maturing entrepreneurial landscape across the continent. This transition can be attributed to several key factors. Firstly, as the startup ecosystem in Africa began to gain traction, successful founders sought to leverage their experience and capital to support emerging entrepreneurs. Secondly, increased access to global networks and funding opportunities encouraged founders to diversify their roles and position themselves early enough for the opportunities that abound in the ecosystem. Additionally, the period also saw a rise in successful startups and noteworthy exits, equipping founders with the financial resources and confidence needed to venture into investment. This not only promised attractive financial returns but also offered a chance to make a substantial societal contribution.

Nigerian, South African and Egyptian Founders are More Likely to Turn Investors

The comparative rate of founders transitioning into investors across various African countries highlights subtle trends within the continent’s entrepreneurial ecosystems. Nigeria emerges as a frontrunner with 36% of founders embracing the role of investors, reflecting its vibrant startup scene and robust investment opportunities. South Africa closely follows at 32%, underscoring its position as a regional hub for innovation and venture capital. Egypt’s rate of 18% signifies a growing interest in investment activities, propelled by government support and a growing tech sector. However, the lower rates observed in countries like Senegal, Ghana, Kenya, Rwanda, Morocco, Tunisia, and Uganda at 6% or below suggest varying degrees of development in their startup ecosystems, potentially hindered by factors such as limited access to funding, regulatory challenges, or emerging entrepreneurial traditions. Despite variations, the collective rise of founders transitioning into investors across Africa signals a promising evolution towards a more inclusive and dynamic investment landscape, ripe with opportunities for economic growth and innovation.

Male Dominance in Founder-to-Investor Transition

Data suggests a notable disparity in the transition of African founders to investors, with a significantly higher proportion of males engaging in investment ventures compared to their female counterparts. Among the founders who transitioned into investors, a substantial 80% were male, while only 20% were female. This discrepancy underscores broader gender imbalances within the entrepreneurial and investment landscapes across Africa. Various factors may contribute to this trend, including unequal access to resources, networks, and opportunities for female entrepreneurs, as well as cultural and societal barriers that may hinder their participation in investment activities. Addressing these disparities is crucial for fostering a more inclusive and equitable entrepreneurial ecosystem in Africa, where both male and female founders have equal opportunities to thrive as investors and contribute to economic growth and innovation.

The Common Characteristics of an African Entrepreneur Investor

African founder-turned investors are known for their long-term commitment to their investment firms. Unlike the more transient founder culture seen in other regions, African tech entrepreneurs tend to stay with their ventures for the long haul. This steadfast approach is evident with the majority of founders who rarely exit their investment firms once they embark on their investment journey. There are, however, exceptions to this trend. A select few manage to run their startups while simultaneously handling the responsibilities of their investment firms, showcasing a remarkable ability to juggle dual roles effectively.

It is also observed that most investment firms led by African founders operate on a part-time basis. This could be attributed to various factors, including the need for diversified income streams or the lack of sufficient capital to warrant full-time dedication. While this might raise questions about the intensity of their commitment, it also reflects the pragmatic approach of African founders who must navigate the unique challenges of the continent’s investment landscape.

The increasing number of entrepreneur investors is indeed commendable and signifies a maturing ecosystem. However, it’s important to acknowledge that only a handful of these founders possess substantial entrepreneurial experience prior to their investment endeavors. This gap in experience doesn’t necessarily diminish their potential to contribute to the ecosystem, but it does highlight the need for a supportive environment that fosters learning and growth for both seasoned and emerging entrepreneur investors.

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