Africa is considered an emerging market; although a lot of people tend to have various reasons why it is termed an emerging market. I agree that it is an emerging market because Africa is dense with a lot of problems and you know what they say, “”.

Problems in Africa can be solved by African startup entrepreneurs and already established entrepreneurs.  And just because I always give information with facts, read what Timbo Drayson said about startups: 

“An Important learning from my previous startup was that it is not the idea that counts, it is the underlying problem that you need to focus on” – Timbo Drayson

 Investors will normally ask the question where I can invest? 

Just before I answer the question, we can look at startups from three major perspectives:

Capital

Labour  

Productivity

An investor coming into the African market comes in with capital and the other two factors productivity and labour have  huge trends in Africa and the combination of the three factors not only lead to an increase in the economic growth, but they also lead to money in an investor’s pocket.

There are so many reasons why Africa is a fertile land for startups but I will be focusing on these reasons:

See Also: Best Ways Any Startup Can Use To Attract Investors

•    Labour

•    Internet

•    Agribusiness

•    IT opportunity

•    Followup capital

•    Transportation

•    Entertainment

Increasing Population

Africa is projected to have one highest population in the world by 2030 notwithstanding the migration of thousands of Africans because of so many problems the continent encounters; these problems have also attracted an influx of investors who see Africa as a land filled with great opportunities and fertile soil for startups.

Where there is a problem, there is a solution, and where there is a solution, money follows.

With the above prediction of the population of Africa, solutions provided for the increasing population leave investors cashing out as rewards for solving those problems.

Internet

The internet is thriving in Africa mostly because of the growing population of youths and the increasing penetration of affordable mobile phones especially mobile phones with internet access. A business that is internet friendly will definitely thrive in the African market.

Africans have not fully utilized options that the internet provides investors who are able to invest in internet related ideas or businesses.

See Also: Nigeria Gains More Internet Users

Agribusiness

Agribusiness is one of the cash cows in Africa not only because Africa has a high number of arable lands, but Africa also has an increasing population.

According to the prediction by World Economic Forum, the population of Africa is set to soar to 1.7 billion people and these simply means the increasing population leads to more mouths to feed and currently Africa is unable to meet the local demand of its people.

 It is a no brainer that Aliko Dangote, the richest man in Africa invested one billion dollars in Agribusiness.

Information Technology

Information technology is a sector that has not found a strong footing in Africa as a continent.

The software outsourcing firm Accelerance reported that Africa has emerged as the next frontier in software outsourcing pointing to the continent’s growing young population. This report reveals the fertile nature of the IT sectors which will give rise to successful startups.

Follow-up Capital

One of the pressing problems with African startups is capital. Most times, entrepreneurs surmount the hurdle of sourcing for startup capital but do not succeed in sourcing for follow-up capital which eventually leads to a flop in the business.

Foreign Angel investors who give more value and structure accompanied with follow-up capital is definitely going to cash out big time in the African market.

Logistics

The African content is a great absorber of logistics. Just as one of the prevalent issues in Africa is the organisation and transportation of goods and services to customers, an investor in this segment of the market not only cash out but solve the major issues of startups in Africa.

Entertainment

The African entertainment industry is one of the emerging markets in Africa with the production of blockbuster movies like Lion Heart, big labels like Mavin record and lots of big entertainers breaking the global ceiling, the entertainment industry is one of the fertile grounds with a startup waiting to be built.

Africa has lots of potentials for startups and we are not just talking about startups for exchange of commodities, we are also talking of startups for services that will not just solve the African problems but also lead to an increase in the economic growth of Africa with a high rate of return of investment for investors.

Chisom Okeke

Chisom Okeke, popularly known as “Somly” is a graduate of Accounting from the University of Benin, Benin City. She is a phenomenal writer and an “Agripreneur” whose focus is to change the narrative of the agricultural sector by providing timely agricultural information and opportunities available in the agricultural sector. She is also a virtual assistant and the anchor of Somly Writes. You can connect with her via Social Media, Facebook – Okeke Chisom; Instagram – okeke_somly; Twitter – somly

Despite the intimidating number of startups on the rise today, lots and lots of startups still keep finding new investors for new businesses. Nigeria’s Wakanow, despite bad balance sheet, recently secured the global alternative asset manager The Carlyle Group to invest $40 million  in the online travel agency focused on West and East Africa, with principal operations in Nigeria. While this may be quite easy for the company, it may be entirely bad for other startup businesses, with little or no business history. However, here are five ways you as a startup can apply to attract investors to your business.

Join A Network of Investors

As a startup, you may not even have enough funds for your business, not to talk of being an investor, but joining a local network of investors may turn out to be a way out of maze. There are so many angel investors who provide funding for a startup, often in exchange for an ownership stake in the company. An angel investor likes to see: 

• The integrity of the founders.
• The gap in the  market which your business seeks to solve
• business plan, clear, definite and ambitious
• Any early evidence of obtaining traction toward the plan.
• Interesting technology or intellectual property.
• An appropriate valuation with reasonable terms.
• The viability of raising additional rounds of financing if progress is made

Also See: How To Invest In Startups And Make Gains

There are so many angel investors network within your locality. In Nigeria, Angel Networks such as  Nigeria Angel Investors, Lagos Angel Network, Entrepreneurs – Lan
collect together all the angel investors around towards helping startups to grow.

Online Fundraising Platforms

While equity fundraising is banned in certain countries like Nigeria donation-based crowdfunding may be an alternative. These crowdfunding platforms have become so popular that startups now resort to using them. You may consider the A.Y.E Trust Fund, Donate-ng.com, Imeela and others. Getting money here is not guaranteed, but you would get the necessary publicity for your business.

Startup Accelerators

Startup accelerators, also known as seed accelerators, are fixed-term, cohort-based programs that include seed investment, connections, mentorship, educational components, and culminate in a public pitch event or demo day to accelerate growth. There are popular startup accelerator programs around, most of them asking for an open invitation for applications from serious startup entrepreneurs. Once accepted, you get to keep developing your work, as well as introductions to other investors, business advice and help in staging future fundraising rounds.  No matter how frustrating some of them could be, there are still startups that preserve and get funded. Just make sure you know the terms and look for a good fit before you apply, or accept the help. It is always better to do your research well and find the best of the best based on success stories. Popular accelerator programs in Nigeria include Tony Elumelu Foundation, Co-Creation Hub,  Wennovation Hub, Startpreneurs, Itanna, etc.

 Venture Capitalists 

Venture capitalists professionally manage venture capital funds and invest in companies with huge potential. They usually invest in startup businesses with expectation of equity and move out when there is an IPO or an acquisition. They provide expertise, mentorship and act as a litmus test of where the organisation is going, evaluating the business from the sustainability and scalability point of view.

However, venture capital investment is often appropriate for small businesses that have passed the startup phase and are already generating revenues.

However, venture capitalists often have a short term focus. They come, invest massively in the company and often look to recover their investment within a three- to five-year time window. Thus, having a struggling product or service, venture capitalists may not be interested in you. They usually focus on larger opportunities that are a little bit more stable, especially companies with a strong team of people and a good traction. Sometimes, they often expect to control your business. There are a lot of venture capitalist firms in Nigeria, such as Cordros Capital Ltd, Venture Garden Group, Unique Venture Capital, Lighthouse Investment Ltd etc.

Find co-founders

Investors are not only interested in your products or services; they are also interested in your team. “Angel investors and venture capitalists often look for talented co-founders, as opposed to a single founder, which is a rarer case,” says Ben Lang of Mapme.

You may, therefore, consider choosing the right leadership team for your startup as having the wrong co-founders can ultimately be more hurtful to your business than having no co-founders at all. However, if you can find the perfect co-founder, it can make the starting process infinitely easier—even beyond attracting investors. “Starting a company alone is very difficult,” says Ben. “Having partners gives you people to rely on, which can be a huge boost for your company.”

Charles Rapulu Udoh

Charles Rapulu Udoh a Lagos-based Lawyer with special focus on Business Law, Intellectual Property Rights, Entertainment and Technology Law. He is also an award-winning writer. Working for notable organisations so far has exposed him to some of industry best practices in business, finance strategies, law, dispute resolution and data analytics both in Nigeria and across the world.