Venture Capitalists' Valuable Contributions Beyond Financial Investments
In the bustling tech landscape of Africa, a series of successful exits, such as Sendwave's acquisition by World Remit, signifies a maturing and blossoming ecosystem. This is according to Kola Aina, founder of Venture Platform, who sees exits as a clear indication of local ecosystems reaching maturity.
The value of Venture Capital (VC) extends beyond mere financial support. Early-stage founders often ponder over the added value VCs can offer, aside from money. VCs typically provide short-term capital to improve a company's balance sheet and infrastructure. However, the risk appetites of VCs vary, and they align their investment strategies accordingly.
Some VCs, like Microtraction, offer additional administrative perks to their portfolio companies. For instance, Microtraction has partnerships with industry giants like Morgan Stanley, Andela, and Microsoft, providing companies within their network with both financial support and administrative advantages.
Ayobamigbe Teriba, Relationships Analyst at Ingressive Capital, focuses on helping startups build strategic partnerships. Ingressive Capital, a $10 Million VC fund, targets early-stage startups across Sub-Saharan Africa's key tech markets.
The due-diligence process in VC investments is meticulous, with product risk, go-to-market risk, and team risks being major themes. Questions often revolve around market problems, execution, and founders' ability to source talent.
Early-stage startups place a high value on introductions to networks of High Networth Individuals, industry and policy leaders, potential product partnerships, and globally recognised accelerators. They also seek clarity on follow-on investments, lead or syndicate investment vehicles, and the VC's willingness to support the company during tough times.
Exits are a critical conversation in the Nigerian venture space. They serve as a measure of scale success, provide liquidity of assets, and boost investor confidence. However, incidents like the Tizeti saga have highlighted the need for VCs to elevate governance processes and statutes. Founders, such as Mitchel Elegbe of Interswitch, stress the importance of understanding the importance of authority and division of responsibilities between founders and boards.
African VC Funds have attracted over $2 billion in foreign investment (Source: Partech). Hundreds of local early-stage ventures have been developed through these funds, contributing to the growing tech ecosystem in Africa. The successes of these exits and the continued growth of African VCs underscore the promising future of the tech industry on the continent.
Rory O' Driscoll, a GP at Scale Ventures, emphasized the importance of considering what a venture board member brings beyond capital. As the tech ecosystem in Africa continues to evolve, the role of VCs will undoubtedly become increasingly crucial in shaping its development and success.
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