2015 Report - Venture Finance in Africa

VENTURE FINANCE IN AFRICA
2015
VENTURE CAPITAL FOR AFRICA
african venture finance starts here
the progress of early-stage high-potential growth companies

2 VC4Africa 2015 VENTURE FINANCE IN AFRICA
INVESTMENTS
44% of the ventures are successful in securing external capital investment.
The average capital secured per venture increased from USD 129,348 in 2013
to USD 205,374 in 2014, otherwise an increase of 59%. The largest
investments are made in South Africa, the most investments are made in
Nigeria, and Kenya secures the largest total amount of external capital.
INVESTORS
Of the 600 investors part of the community, 82% invested in an African
venture. Angels represent one-third of the network, followed by Venture
Capital firms and Social Impact Funds. Investors report management and
team as being the most important factors they consider when investing. The
country’s level of economic growth and size of market are the most
important factors when deciding where to invest.
ECOSYSTEM
The ventures that participate in sector events, or join an incubator or
accelerator, secure on average USD 126,090 in external investment. This is
23% more than their counterparts who do not participate in such programs.
Ventures that have established a partnership with a multinational company
secure 150% more capital on average, and are 57% more likely to
break-even by their third year of operation.
December 2014
in annual revenue. The number of ventures with this kind of revenue potential
has grown by 56% over the course of 2014. Moreover, almost one-third of the
ventures turned profitable or at least reached their point of break-even.
EXECUTIVE SUMMARY
Innovative ventures yield high social and environmental impact
and are a key driver for Africa’s development. It is the opportunity
driven entrepreneurs that generate much of Africa’s employment,
income and hope for a better future. But how are these
companies progressing over time? This question is answered in
the VC4Africa 2015 Venture Finance in Africa report.
Data sets on this emerging segment are limited and there are few compara-
tive studies. The VC4Africa community of startup entrepreneurs and investors
collects data to help explain trends and set the way forward. This report cap-
tures the performance of ventures listed on the online platform and highlights
the activity of investors part of the network. As the community continues to
grow, it is expected this yearly report will lend insights into what is happening
across the larger startup space. The report breaks down insights across 5
indicators: employment, performance, investments, investors and ecosystem.
EMPLOYMENT
Over the course of 2014, the average team size for a venture increased by
54%, resulting in 5.7 jobs per venture. The same ventures expect to quadruple
their team size by the end of 2015. The data shows that new jobs are being
created in almost all African countries. Agribusiness, health services and
education related ventures are the most significant job creators.
PERFORMANCE
49% of the ventures start generating revenue in their first year of operation.
By their fourth year, 34% of the ventures expect to book more than USD 100K

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TABLE OF CONTENTS
2 EXECUTIVE SUMMARY
4 FOREWORD
5 ABOUT VC4AFRICA
5 Graph 1 Venture applications
5 Graph 2 Published ventures
6 RESEARCH
6 METHODOLOGY
7 BREAKDOWN SAMPLE
7 Graph 3 Distribution of venture stages
7 Graph 4 Venture breakdown by top 20 sectors
8 EMPLOYMENT
8 Graph 5 Total and average jobs created + expected
9 Graph 6 Total jobs created per country
9 Graph 7 Median and average team size across top 8 countries
10 Graph 8 Distribution of jobs across top 8 sectors
10 Graph 9 Median and average team size across top 8 sectors
11 PERFORMANCE
11 Graph 10 First year of revenue generation
11 Graph 11 Distribution of revenue generated per year
11 Graph 12 Distribution of years of break-even
12 INVESTMENTS
12 Graph 13 Distribution of capital secured
12 Graph 14 Median and average external capital secured
13 Graph 15 Median and average external capital per venture stage
13 Graph 16 Invested capital per funding source
13 Graph 17 Capital secured across the top 20 sectors
14 Graph 18 Capital secured per country
14 Graph 19 Median and average external capital secured across top 8
countries
15 INVESTORS
15 Graph 20 Investment activity
15 Graph 21 Median investment size by investor category
16 Graph 22 Allocation of investments per sector
16 Graph 23 Venture decision making factors
17 Graph 24 Country decision making factors
18 ECOSYSTEM
18 Graph 25 Monetary benefit of accelerator programs
19 Graph 26 Multinational impact on median and average invested
capital
19 Graph 27 Multinational impact on revenue generation
19 Graph 28 Multinational impact on break-even point
20 KEY TRENDS: 3 INVESTOR CASE STUDIES
24 CONCLUSION
24 AFTERWORD
25 CLOSING REMARKS

The data in this report indicates these companies are maturing over time,
and that their economic and social impact starts to increase in parallel. And
despite the limited sample size, these companies are increasingly representa-
tive of what is happening across the larger African startup ecosystem.
The companies registered on the platform are securing increasing amounts of
investment, and both revenue and team size increase significantly from when
this same study was conducted in 2013. As these enterprises formalize their
operations they contribute to the tax base of their local governments, which in
turn increases their ability to invest in infrastructure and social services. More
importantly, the entrepreneurs represented in this report do create meaningful
employment opportunities for their fellow citizens. This is a critical economic
contribution when taking into account that 43.3% of the Sub-Saharan African
population is under the age of 141
. In many ways, the future of the continent
will be shaped by the continued success of its entrepreneurs.
The emergence of local investors is a key change and contributor to the
ecosystem. We recognize three key trends that have considerable influence
on the African startup funding landscape: a growing interest from African
diaspora to invest in startups in their country of origin, the increasing number
of business professionals turning angel investor locally and a growing appe-
tite for cross-border investing across Africa generally.
We would like to thank the entrepreneurs and investors that participated in
this study. They continue to inspire all of us at VC4Africa. Our hope is that
entrepreneurs and investors use this data to benchmark their own progress.
We also hope the report captures the progress these entrepreneurs are
making and offers hard data that shows these companies are i) successfully
growing their operations over time and ii) adding much needed jobs to the
African marketplace.
- VC4Africa research team
FOREWORD
The VC4Africa community is a global peer-to-peer network where
entrepreneurs and investors come together to build great African
success stories. A growing number of ventures are active on our
platform but do they make a difference? Do the companies we
engage as a community add to the tax base of African economies
and are they indeed a source of employment for the continent’s
burgeoning population of youth?
1
Source: World Bank, 2013

1. VENTURE APPLICATIONS
cumulative applications
ABOUT VC4AFRICA
The vision is to enable African entrepreneurs and investors to find
each other online. We aspire to become the preeminent social
network for entrepreneurs and investors focused specifically on
innovative business opportunities across the African continent.
Learn more about the community by checking out our welcome
page.
• The ventures are early stage, post-seed and pre-late stage, and
require investments less than USD 1 million;
• The primary sectors include mobile, web, renewable energy, healthcare,
education and agriculture, amongst others;
• Each venture is scalable, makes smart use of technology, or is disruptive in
their application of a business model;
• Thirty percent of the registered ventures have an explicit social mission and
could be qualified as a social enterprise.
350
900
1700
2600
2011 2012 2013 2014
2. PUBLISHED VENTURES
breakdown by country
PERCENTAGE
Other countries repesented in the study:
Algeria, Angola, Benin, Burkina Faso, Burundi, Cape Verde, CAR, Chad, DRC, Gambia, Guinea,
Lesotho, Liberia, Madagascar, Malawi, Mali, Mauritius, Morocco, Namibia, Sierra Leone, Somalia,
Sudan, Swaziland, Togo, Tunisia and Zanzibar

Every year VC4Africa reaches out to entrepreneurs who are
part of the community to find out more about their progress.
Specifically, this report looks at their organizational advancement
as measured by growth in revenue and the number of new jobs
created over time. This feedback underpins an annual benchmark
for the companies listed on the platform, and offers tangible
evidence of their impact.
The report breaks down insights across 5 parameters: employment, per-
formance, investments, investors and ecosystem. If you would like to have
more specific insights on certain regions or other findings please contact the
research team:
e-mail: service@vc4africa.biz, tel: +31 20 779 55 74
RESEARCH METHODOLOGY
The research team is in constant communication with members
and conducts a regular series of surveys, interviews, focus
groups, design sessions and brainstorms. For this report, the data
is pulled from two main sources i) an annual survey conducted
with the ventures registered on the platform and ii) the investors
who are part of the community.
VENTURES
Entrepreneurs with a venture profile were asked to participate in an online
survey. The survey was sent to 1300 entrepreneurs and 257 entrepreneurs
responded, a 20% response rate. Entrepreneurs were asked to report on their
revenue, profit, and change in team size over time. They were also asked to
report on their capital requirements and progress fundraising. In recognition of
their positive contribution to society, participants received the ‘Entrepreneurs
Rule’ badge.
INVESTORS
600 investors part of the community were asked to participate in an online
survey. 71 responded, a 12% response rate. Investors were asked to provide
feedback on their level of activity, the amount of capital available, their inten-
tions to invest, and the considerations they make when allocating.
LIMITATIONS
The data sets are limited and by no means do they represent the African
investment space. At the same time, there is little information available on this
emerging segment and there are few comparative studies. Any conclusions
should take the limited amount of data into consideration while recognizing
that as the community continues to grow these insights will improve over time.

3. DISTRIBUTION OF VENTURE STAGES
base N = 257
57% of the ventures are in a startup phase where 43% are in a growth stage.
Startups focus on solution validation, product market fit and survival, whereas
growth ventures focus on expanding product line, growing revenue and
growing team.
43% 57%
4. VENTURE BREAKDOWN BY TOP 20 SECTORS
computer software, internet and e-commerce are the three sectors best
represented in this report.
Computer Software
Internet
E-Commerce
Agribusiness
Education
Media
Professional / Diversified Services
Health Services
Clean Technology
Financial Services
Food Beverages
Renewable Energy
Telecommunications
Computer Hardware
Leisure
Transportation
Import/Export
Retail
Construction
Real Estate
24 %
21 %
17 %
15 %
14 %
12 %
11 %
9 %
7 %
7 %
7 %
7 %
7 %
5 %
4 %
4 %
3 %
3 %
3 %
3 %
BREAKDOWN SAMPLE

EMPLOYMENT
This section of the report looks at the job performance of the
companies. The graphs show job creation over time and job
growth by country and sector.
Total amount of jobs created is highly dependent on the sample size. That
said, with over 1,000 people hired up to 2013 and another 4,176 jobs expected
to be created by the end of 2015, the figures in this section show that ven-
tures active on the VC4Africa platform are creating a significant number of
new jobs.
A deeper analysis indicates that in almost all African countries new jobs are
being created. Significant outliers include Nigeria (18%) and Kenya (17%) where
the most ventures are located. For the sector analysis only segments with a
subsample size of 20 or higher have been taken into account. Agribusiness,
health services and education related ventures are the most capital intensive.
The average team size for e-commerce companies is highly influenced by a
few outliers.
5. TOTAL JOBS CREATED
realized up to 2013 and expected by the end of 2015
= 100 jobs
created: 1011 jobs, average = 5,7
expected: 4176 jobs, average = 21,3


COUNTRY
Nigeria
Kenya
South Africa
Tanzania
Uganda
Ghana
Cameroon
Egypt
NUMBER OF VENTURES
CREATING JOBS
38
36
17
12
12
11
9
9
X median
O average
7. TEAM SIZE
median and average values of top 8 countries
0 to 50
51 to 100
101 and more
6. TOTAL JOBS CREATED
per country
X realized
O percentage
5,5
6,2

Agribusiness N 40
Health Services N 24
Education N 37
E-Commerce N 45
Computer Software N 63
Professional/Diversified Services N 29
Media N 30
Internet N 53
MEDIAN AVERAGE
9. TEAM SIZE
median and average employees per venture.
Top 8 sectors:
8. JOB CREATION
distribution of top 8 sectors
Computer Software N 63
Agribusiness N 40
Internet N 53
E-Commerce N 45
Education N 37
Media N 30
Professional/Diversified Services N 29
Health Services N 24
27%
20%
17%
17%
13%
10%
9%
8%
BASE N = 257
% = PERCENTAGE
OF TOTAL

Year 1
Year 2
Year 3
Year 4
Year 5
Not break-even yet
USD +100K
USD 50 - 100K
USD 10 - 50K
less than USD 10K
no revenue
11. REVENUE GENERATION
distribution per year
year 1 year 2 year 3 year 4
12. BREAK-EVEN POINT
distribution of years when ventures
reached point of break-even
10. REVENUE GROWTH
distribution of years when ventures generate their first revenue
PERFORMANCE
This section of the report looks at the revenue performance of the
companies. Especially how revenue of the companies improves
year on year and a comparison to their break-even points.
With over 70% of all ventures generating revenue, it is clear that the African
market is full of opportunities. Looking at the distribution of revenue genera-
tion per year, the majority of ventures are making less than USD 10K in their
first year of business. On the other hand, the positively changing distribution
of revenue generation over time indicates their increasing market potential.
Moreover, almost one-third of the ventures turned profitable or at least
reached their point of break-even.


13. INVESTMENTS
distribution of capital
secured
Only founder capital N 17
Internal + external capital N 114
No capital N 126
INVESTMENTS
This section of the report looks at the capital raised by the
companies participating in this study. The sources of capital
being deployed, the stage the capital is being invested, and
how the capital is invested across sectors and countries are also
researched.
Total invested capital more than doubled compared to last year’s research:
from USD 12 million to USD 26,9 million. This can be explained partly by the
growing sample size. However, looking at the average amount invested per
venture the numbers increase from USD 130K last year to over USD 200K this
year. The invested capital has been split into founder’s capital and external
capital. Results show a substantial amount invested by the entrepreneurs
themselves (46%).
The most capital is invested in Kenya, followed by South Africa, Uganda and
Nigeria. Where Kenya is 33%, South Africa is 19%, Uganda is 10% and Nigeria
is 9%. From the median and average values it can be concluded that invest-
ments in South Africa are larger than investments made in Kenya. This might
be due to the more mature state of the South African startup space. In the
case of Uganda the average value is 15 times above the median value, the
result of one outlier.
26,903,943

14. EXTERNAL CAPITAL
median and average investment secured from external investors
N = 114
TOTAL = USD 14,534,126.20
USD 30,000.00 USD 127,492.34
MEDIAN AVERAGE

Founder
USD 12,670,067 N 112
Friend/Family
USD 2,228,301 N 65
Grant/Competition
USD 3,348,025 N 52
Angel Investor
USD 3,297,047 N 37
VC/Impact Fund
USD 2,589,331 N 22
Bank Loan
USD 1,018,722 N 26
Not specified
USD 1,752,450
26,903,943
16. INVESTED CAPITAL
per funding source
E-Commerce
Agribusiness
Clean Technology
Health Services
Financial Services
Media
Computer Software
Renewable Energy
Wholesale
Transportation
Education
Food Beverages
Internet
Automotive
Telecommunications
Computer Hardware
Professional/Diversified Services
Retail
Import/Export
Real Estate
29%
17%
14%
14%
13%
12%
12%
11%
11%
10%
9%
8%
8%
6%
5%
5%
4%
4%
4%
4%
17. INVESTED CAPITAL
by top 20 sectors
GROWTH N 111
STARTUP N 146
median and average investment secured from external investors
MEDIAN AVERAGE
USD 65,350.00 USD 177,442.08
USD 20,000.00 USD 61,298.27

X % of investments
O number of investments
COUNTRY
Nigeria
Kenya
Tanzania
South Africa
Ghana
Uganda
Cameroon
Egypt
INVESTMENTS
24
19
12
11
10
10
9
9
18. CAPITAL SECURED
per country
median and average external
capital of top 8 countries
X median
O average
,
,
,
,
,
,
,
,
,
,
,
,
,
,
,

INVESTORS
This section of the report looks at the investors part of the
community. It investigates their activity level, average size of
investments and their allocation. Also insights on the venture
and country factors that influence their investment decisions are
analyzed.
The investors are actively investing with 82% indicating investments have
already been concluded. The difference in investment sizes varies between
the different types of investors. Angels are investing between USD 25K and
USD 100K, whereas VC’s and social impact funds are investing over USD
100K. The ICT sector is the most attractive for investors securing 61% of all
investments.
Entrepreneurs should focus on the quality of their management and team
to attract investors. This point was identified as the most important factor for
investors deciding in which ventures to invest. Team was followed by finan-
cial performance and market size. On a country level the economic growth,
combined with investment protection and political stability, are seen as the
most important factors for investors. At the same time, affinity with the market
is seen as less important when compared on average. This could indicate an
increasing opportunity for cross-border investing and appetite for syndication.
Invested in African companies N 58
Not yet invested in African companies N 12
No answer N 1
20. INVESTORS
investment activity

Venture Capital firm N 16
Social impact fund N 10
Other N 11
SME lender N 6
Angel investor N 22
Accelerator N 6
Total sample N 71
0 100K 200K 300K 400K 500K
21. MEDIAN INVESTMENT SIZE
by investors category in USD

18%
6%
13%
21%
25%
25%
25%
38%
38%
61%
ICT N 34
Agriculture N 27
Finance Banking N 27
Real Estate N 18
Healthcare N 18
Education N 18
Transportation N 15
Wholesale Retail N 9
Sanitation Waste Management N 4
Other N 13
BASE N = 71
22. ALLOCATION OF INVESTMENTS
per sector
23. DECISION MAKING FACTORS
on a venture level indicated by investors

24. DECISION MAKING FACTORS
on a country level indicated by investors

ECOSYSTEM
This section of the report looks at some of the external influencing
factors, for example how the invested amount of capital changes
when there is a relationship to a multinational company. This
section also looks at the ability of ventures to raise capital as per
their membership to a hub and/or participation in pitch events.
The importance of participating in an acceleration program, or being selected
for a pitch event, results in an increased amount of capital raised. Ventures
participating in acceleration programs or events secure higher median and
average amounts of capital compared to ventures that do not.
Multinational collaboration, defined as a strategic business relationship, is an
important factor in the performance of startups. Analyzing the results,
collaboration with multinationals increases both median and average amounts
of invested capital and shortens the time to break-even. Also the percentage
of ventures generating revenue is higher for the sample collaborating with
multinationals when compared to ventures that do not.

25. BENEFIT OF ACCELERATOR PROGRAMS
with or without participation in acceleration program or event
MEDIAN
YES USD 45,000.00 USD 126,090.20
NO USD 25,000.00 USD 102,576.17
AVERAGE

YES NO
Year 5
Year 4
Year 3
Year 2
Year 1
No break-even yet
28. MULTINATIONAL COLLABORATION
distribution of multinational impact on break-even point
median and average investment size with or without impact of multinationals
percentage of ventures generating revenue with or without impact of
multinationals
YES NO
MEDIAN AVERAGE
INVESTMENT RATE
No multinational collaboration N 172 - 49%
Multinational collaboration N 85 - 55%
NO USD 16,875.00 USD 72,309.36
YES USD 90,000.00 USD 180,002.98

KEY TRENDS
The entrepreneurial base on the African continent is growing over time. More
importantly the quality of the ventures is improving. As a result, we recognize
three key trends that have considerable influence on the African startup
funding landscape:
1. A growing interest from African diaspora to invest in startups in their
country of origin,
2. The emergence and increasing number of business professionals turning
angel investor locally,
3. A growing appetite for cross-border investing across Africa generally.
At VC4Africa we see that these trends highlight a change in mindset and a
growing recognition of the opportunities and entrepreneurial talent coming
from Africa. These stories also capture the value, importance, and relevance
of such a community and platform. They show that by connecting a global
network of business professionals we are better able to unlock resources
across the African startup ecosystem.

CASE STUDY
The World Bank estimates there are
approximately 169 million Africans living
outside the continent in North America,
Latin America, the Caribbean and Europe,
not including Asia. In 2012 it was calculated
remittances were USD 31 billion. The World Bank
forecast expects the numbers to increase to USD
33 billion in 2013, USD 36 billion for 2014, and USD 39 billion in
2015.2
These remittance flows are an important source of funding
for African based ventures.
Rodrigue Fouafou is a member of the VC4Africa community since 2013. He is
a Cameroonian born Canadian entrepreneur and angel investor who originally
moved to Ottawa, Canada to pursue his studies. Rodrigue now lives there
permanently and manages his own group of companies.
In the last 10 years his business endeavors have proved successful and he
has been able to build up personal savings over time. During the last two
years, Rodrigue has been thinking a lot about Cameroon and to what extent
entrepreneurs might be innovating in his home country. Eager to find out
more about these entrepreneurs, and to engage them in conversation, he
joined VC4Africa.
It was through VC4Africa’s Mentorship Marketplace that Rodrigue ended up
engaging the founders of two companies, Njorku and Kiro’o Games. The
former is a job listing service and the latter seeks to become the first digital
gaming company in central Africa. It is through these mentorship-based inter-
actions that Rodrigue got to know each founder and better understand the
Cameroon
 investors from the African diaspora
business they were building. Being a Cameroonian, Rodrigue can appreciate
the business climate and has an easier time assessing the market risks. As a
result, Rodrigue made investments into both companies and is now working
with the teams to see how he can help them grow and develop their visions.
The VC4Africa community welcomes a growing number of members like
Rodrigue who join the network and are interested to engage with entrepre-
neurs. It is expected this trend will only grow in the years to come.
2
Source: World Bank, 2013

The timing for local African angels to rise couldn’t be more critical. Indeed,
foreign capital can only engage when there are local investors willing and
able to lead the way. At the same time, African companies increasingly look
outside their country for expansion or follow on capital. They seek access
points to these networks. At VC4Africa we see a growing number of high net-
worth individuals starting to invest locally. This is the single most significant
development seen over the course of 2014.
CASE STUDY
Over the past two years various angel
networks have emerged across Africa,
including the Lagos Angels Network (LAN),
Cameroon Angels Network (CAN), Cairo Angels,
Ghana Angel Investment Network (GAIN), Silicon
Cape and many others. VC4Africa expects the
number of networks to increase the coming period, and as a
result a growing number of high net-worth individuals will become
active as angel investors.
Nigerian-Finnish mobile payment startup IroFit raised USD 600K in seed
funding from a group of investors including a leading Nordic early-stage VC
firm, a major Finnish payments industry software development company, and
a Nigeria based industry expert and angel investor. IroFit’s founder and CEO
explains: “The angel investor from Nigeria found us through our VC4Africa
venture profile and then reached out to us”.
The funds raised will be used to finalize IroFit’s proprietary platform and pay
for the rollout of the service in Nigeria. In addition to the funding round, IroFit
simultaneously signed a major agreement that guarantees a hundred thou-
sand payment devices will be available to the Nigerian market upon launch.
The critical point in this story is to recognize that African born innovations, and
the entrepreneurs that drive them, won’t receive the support they need
until local investors vouch for them first. In this case, the Nigerian angel
investor added a unique perspective to the market. The commitment from the
investor put the wheels in motion needed to get other investors involved.
Nigeria
 emergence of the local angel investor

CASE STUDY
Historically investors hesitated to invest
in a company more than a one-hour drive
away. But with the emergence of technology,
and increasing access to real-time data and
analytics, distance becomes less of a factor.
This also builds on the realization that innovation can come from anywhere in
the world. With over 20,000 angel investors in Europe alone, and an increas-
ing number of investors who consider opportunities in Africa worldwide, there
is a growing appetite for cross-border investing.3
Meet Dr. Stefan Shaw, a manager based in Munich, Germany, who invested
in Kenyan startups Karibu Solar Soko. As he explains in an interview we
conducted: “My wife and I have decided to dedicate a percentage of our
income to social impact in Africa. Instead of supporting aid projects, we want
to support businesses that are sustainable and yield both a social impact and
financial performance”.
Kenya
 increasing interest for cross-border investing
The motivations for investors vary greatly. In this case, Stefan explains, “Invest-
ing comes with risk, but my wife Rose and I are getting a lot in return: Direct
access to the founding team, becoming part of their business story and of
course the chance to become a contributor to a business that eventually will
change the life of a lot of people for the better. Isn’t that worth risking some-
thing?”
When asked about what he looks for in the companies he supports he talks
about the quality of the founders and team. Specifically he explains: “We are
looking at the people who run the businesses and try to understand their val-
ues. If they correspond with ours this is a major step towards getting involved.
Above all, I find honesty regarding the things that haven’t worked especially
important. This helps me understand both how the business works and also
how the team deals with failure.”
VC4Africa sees a growing number of foreign-based angels looking at early
stage African opportunities. And where distance at one point might have been
an issue, increasingly angel investors look to the team and their proven track
record to overcome the distance. Cross-border investing is growing in popu-
larity and is a trend expected to grow the coming years.
3 Source: EBAN (European Business Angel Network), 2010

CONCLUSION
The report shows an increasing number of businesses
successfully growing their operations over time. They generate
an increasing amount of revenue and add new jobs to the African
marketplace. Indeed, supporting Africa’s opportunity driven
entrepreneurs generates a meaningful return.
Despite considerable gains, the ‘missing middle’ problem persists, although
narrower than when VC4Africa started in 2007. From this report, we know
that entrepreneurs have been able to secure venture funding In 26 African
countries. Especially in leading markets like Kenya and Nigeria, founders
increasingly succeed in raising the first USD 100,000 from external investors.
The challenge now is to reach entrepreneurs across markets. At the same
time help these companies grow to a size they become viable prospects for
the larger venture capital funds, impact investors and SME financiers.
AFTERWORD - BY JASPER GROSSKURTH
These are exciting times for those who invest in Africa. We
observe a strong increase of interest ranging from small scale
investors to global multi-billion dollar funds. Their money meets
an increasing number and diversity of businesses. New ways to
match funds with businesses, such as VC4Africa, are catalysts for
this growth of activity.
This report clearly shows the momentum. The number of venture applications
on VC4Africa has grown by 640% in just 3 years. That growth in volume
reflects a larger and more vibrant SME ecosystem in Africa: more ideas put
into action, more encouragement, more risk taking entrepreneurs, more
networks, more visibility. While many of the companies might still be in a stage
of pure ambition or mentor dependency, a quickly increasing number are
investor ready with attractive offers.

• It will be interesting to see what trends emerge given larger
data sets showing how ventures mature over longer periods of
time;
• The average and median values of invested capital per venture
differ considerably. This implies a significant impact due to a
few outliers. Therefore these outcomes have to be treated
carefully;
• The top investment categories are related to the Technology
sectors, and then followed by Agriculture, Health, Finance and
Energy;
• This is the second time VC4Africa has endeavored to create
such an index, an activity we look to build on in the future;
• You can see which companies participated in the index and
interact with the participants on VC4Africa.biz.
My own favourite set of indicators in the VC4Africa survey covers the team
size. Just a year ago, the survey yielded an average team size per company
of 3.7. The 2015 survey reports a rise to 5.7. Better even, the participating com-
panies expect to quadruple their team size within the next two years. Many
might fall short of that target, but the positive momentum is significant.
Larger teams reflect the fact that the idea owner is able to convince others of
the benefit of the idea and has more shoulders to stand on. And in a large, yet
committed group an investor is more likely to find promising people to work
with. Given that team is probably the single most important decision criterion
for investors, the growing team size is a very positive signal.
When we look at revenues, we see another set of hopeful signals. The share
of companies participating in the survey that have reported to already have
revenue stands at 72%. And for those that have revenue, the average reve-
nue ranges from less than USD 10K per year for fresh startups to a median of
USD 50K and more for mature businesses. Investors love businesses with a
proven business model and there is no better proof than revenues.
The money follows these positive developments. In last year’s survey the
average investment into a company was USD 130K, including external funding
and owner’s funding. This year’s survey puts the average investment at USD
205K, almost 60% growth. The average external funding alone has now
grown to USD 127K.
This heightened level of activity will bring stories of success and of failure,
stories of big wins and total losses. Both, bulls and bears of Africa will find
evidence confirming their view. In that way, Africa is growing into a regular
investment market where professional businesses meet professional inves-
tors. 2015 might well be a major positive tipping point on this journey. I am
very bullish and find my evidence in the VC4Africa fresh business survey.
- Jasper Grosskurth is Managing Director at Research Solutions Africa Ltd.
CLOSING REMARKS

If you would like to have more specific insights on certain regions or other
findings please contact the VC4Africa research team:
e-mail: service@vc4africa.biz, tel: +31 20 779 55 74
RESEARCH TEAM
Lead Research, Thomas van Halen
Data Analyst, Vivek Badgamia
Author, Ben White
Author, Bill Zimmerman
Editor, Hendrik Admiraal
Editor, Miguel Heilbron
Editor, Bertil van Vugt
RESEARCH PARTNERS
Research Solutions Africa, Jasper Grosskurth
Nyenrode Business Universiteit, Andre Nijhof
NETWORK PARTNERS
AfriLabs
DEMO Africa
EAVCA
IN PARTNERSHIP WITH
DOEN Foundation
Humanistic Institute for Development (Hivos)
Argidius Foundation
GRAPHIC DESIGN
40rovers
All photos in this report are used under Creative Commons license 4.0.
Photo credits: TEDx Accra, Oluniyi Ajao, page 6; Nile vista real estate, David Evers, page 17;
Guy talking, Michael Pollak, page 20; Patrick Bukoma, DFAT photo library, page 21; Mobile affair,
Yenkassa, page 22; Tetteh Quashie, Accra, Ghana, George Appiah, page 24.
VC4Africa’s vision is to enable African entrepreneurs and investors to find
each other online. We aspire to become the preeminent social network for
entrepreneurs and investors focused specifically on innovative business
opportunities across the African continent. Learn more about the community
by checking out our welcome page. Get involved and join the community
today!
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2015 Report - Venture Finance in Africa

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