6 steps for starting as an angel investor in Africa

By Ben White on August 24, 2012

Not a day goes by that we don’t see an article highlighting various resources entrepreneurs can tap into building their business. On the contrary, there has been limited content for Angel investors or high net-worth individuals looking to get started. I hope this post can do something about that and I have worked to outline some strategies members apply here at VC4Africa.

1) First step is to get involved

Plain and simple, if you are looking to engage African based ventures, joining the VC4Africa investor network is an easy place to start and low barrier to entry. If anything, we want to start connecting resources in smart and efficient ways. Your membership expands your rolodex, gives you increased visibility, improves your deal flow (with plans you actually want to read) and accelerates the due diligence process.

Just by being part of the network you will get a better sense for what is happening in the space. You will see where ventures are coming from and gain useful insight into who you want to meet next. Having access to ventures across geographies and markets also allows you to contrast and compare.  We see a growing number of trends within particular verticals, and where else are you going to find data on so many ventures? See the benefits page to find out more about our services and Pro Account.

2) Network with fellow Angels

Assuming that you are an accredited angel, and you have participated in some deals, the networking process is straightforward. Connect with other members who are interested in similar geographies or types of businesses. Follow fellow Angels and they will follow you back. You can exchange messages and explore ways to collaborate. Consider listing investments you have made, the sectors and the geographies you are interested in. Make sure to include your linkedin profile and website. This information helps other members contact you with information that is going to actually be relevant to you. Here is an example profile.

3) Develop a stream

Now the fun begins. Once you have connected with fellow investors, their activity will show up in your stream. They can contact you when things come up and you can start to share knowledge, ideas, questions, strategies and such. At the same time, you can follow entrepreneurs you find promising and get updates on their progress. The network of people you follow determines the level of visibility you will have across the network. The more selective you are the more tailored the information you receive. VC4Africa is designed like Twitter so don’t worry about getting information you don’t want from contacts you don’t want to know. You can follow and unfollow anyone you like, meaning you are in complete control 100% of the time.

4) Engage promising entrepreneurs

As your network on VC4Africa grows, so will your feeling for what is happening in the space. You will also begin to see which entrepreneurs are making real progress. As a registered investor you have the ability to review the entrepreneur’s documents needed to gain additional insight. You can relay what you like, or what you feel is still missing, and the entrepreneur can work to provide these details. At the same time, you can follow the interactions between the entrepreneur and other investors. In this way, you can crowdsource the due diligence process and partner with fellow investors so as to reduce time, cost and risk. When you feel the time is right, you can engage the entrepreneur for a conversation on Skype. Get a feel for how they look to handle particular issues, whether or not they have done their homework on you (a good sign of how serious they are), and get a feel for whether or not there is a potential fit. It isn’t about replacing physical one on one meetings, its about making the meetings you take worth your time.

5) Screen advisors and cross-check with fellow Angels

As the support base for a venture grows, reach out to the advisors and fellow angels to get their opinion. Get a feel for their own domain expertise, interest in the business and feel out the questions or concerns they might have about the ventures prospects. You can find out a lot of information this way and get a good sense about the momentum and interest to move forward. If there is a shared interest, it is possible to combine due diligence efforts and to work together to source required inputs. Make sure to also follow your co-investors so you can communicate throughout the process, as the deal progresses, and the coordinate post investment.

6) Refer Your Own Deals / Pool resources

You can also use VC4Africa to pick up additional capital for your existing portfolio. Refer deals and list yourself as the lead investor. Together with the entrepreneur you can seek out interest from others in your investment network. Its a great way to pool capital, bring in additional skill sets or networks of contacts that could be invaluable to the success of the venture. For example, getting investors on board from key markets in neighboring countries. In a case like this, they not only offer additional capital, but local connections and possibly needed oversight.

In conclusion, the African innovation space is changing quickly. Gaining visibility and staying up to speed with developments is key. It is important to know that the network is quite personal and at VC4Africa your reputation counts. Develop your relationships for the long-term and your chances of succeeding in the market will greatly improve.

Hopefully we will see more content come online for the investor community and I look forward to getting feedback from people’s different experiences.

Check out our benefits page and learn more about the VC4Africa Pro Account.

What kind of ventures do I find on VC4Africa?

More than 250 entrepreneurs have published their business online from over 30 African countries. The ventures on VC4Africa are early stage and require investments between USD $10K and USD $1 million. The primary sectors include mobile, web, energy and health care, amongst others. Each venture is disruptive in their use of technology or in their application of a disruptive business model. Thirty percent of the registered ventures have some form of social mission and could be qualified as a social enterprise. Listed entrepreneurs have access to free online tools, mentorship opportunities and private deal rooms. Registered investors are able to see which screened ventures are fundraising, track their progress and review private documents. The community has members in 159 countries and informal networking meetings that have been hosted in more than 35 cities around the world.

Not a member? Join VC4Africa