The Africa Early Stage Investor Summit (AESIS) brings key investors from across Africa and beyond together to exchange best practices, share ideas, learn from each other and make deals.
This exclusive investor-only event was hosted in Cape Town between 13 and 15 November 2019, and Ross Jenvey, CFA and General Partner at Kingson Capital, shares his thoughts on the outcomes that were achieved at the summit.
Africa as an investment destination
One of the key take outs from the summit, according to Ross, was just how evident the growing interest in Africa as a Venture Capital (VC) investment destination is becoming. Ross says, “There’s particularly strong interest coming from the Far East and Middle Eastern sovereign wealth funds”.
Global news network Al Jazeera reported in June this year that, while Foreign Direct Investment (FDI) is falling in other global markets, it is on the rise in Africa. 2018 saw approximately $46bn in FDI flowing into the continent – an 11-percent increase compared to the previous year.
Venture Capital investment growth on a similar trajectory to South East Asia
“In terms of the number of closed deals and their value, Venture Capital statistics for Africa in 2018 were almost identical to where South East Asia was as a VC investment region around five years ago, and since then, South East Asia has seen a boom in VC investing”, says Ross.
So, if the current pattern continues, it’s entirely possible that Africa will see a similar investment boom in years to come. Ross adds, “The ecosystem in Africa is in an ongoing state of growth. And events like AESIS are critical for strengthening networks across the continent in the VC industry”.
“Scale-ups” and Start-ups
Ross continues, “12 African start-up businesses were given the opportunity to present at the summit, and they were all of a very high calibre”. These “scale-up” businesses had already gained positive traction in the market and required extra capital to support their increased growth.
AESIS also hosted masterclass sessions for new and aspiring fund managers. “The take-out from the sessions was that, even though VC is a tough industry when it comes to making excess returns, patience, persistence and grit are the key ingredients for success”, says Ross.
Ross closes by saying, “Discussions around valuations were extremely enlightening, as VC valuations have climbed considerably in recent years. And as more foreign capital flows into
Africa, the industry runs the risk of investing in companies using US-type valuations. If funds are unable to achieve US exit prices, there could be poor returns in many funds”.
Overall, as Global Entrepreneurial Week draws to a close and AESIS leaves investors with a lot to think about, the Venture Capital outlook for Africa looks promising as we get closer to 2020. And it looks like there’s more growth to look forward to.
Kingson Capital is an established Venture Capital provider that also offers route to market strategies and support to African business, with a strong focus on the early stage space. Contact Kingson Capital to find out more about their Venture Capital strategies and services.
About Kingson Capital
Kingson Capital (Kingson) is a Venture Capital firm and also a registered Venture Capital Company (VCC) founded in 2015. As a Section 12 J VCC, all investments with Kingson are fully tax-deductible in the tax year that they are made. This has the effect of both lowering the capital at risk and enhancing future returns for investors. Kingson invests in entrepreneurs who have unique and scalable business concepts, whose products change the current landscape and existing business models.
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