AVCA - Afrikan Heroes

New Private Capital Academy Set Up to help Boost Economic Growth in Africa

August 25, 2021

Abi Mustapha-Maduakor, Chief Executive Officer at AVCA

A new private capital academy is being set up to help play an instrumental role in catalysing investment into the asset class by deepening the capacity of African institutional investors. To bolster economic and social growth in Africa, the African Private Equity and Venture Capital Association (AVCA) has announced the establishment of the AVCA Training Academy (“AVCA Academy”) to provide private investment professional development across the continent. This is a first-of-its-kind in the industry and is aimed at supporting private investment professionals interested in Africa, by providing an agile and innovative learning platform tailored to Africa’s dynamic and diverse market.

According to Abi Mustapha-Maduakor, Chief Executive Officer at AVCA, “The AVCA Academy is our solution to the increasing need for a platform to support first-time fund managers through the fundraising and investment lifecycle. We believe that education is the key to unlocking growth in this sector. Education should provide the inspiration and support needed to get African private equity on track to shape an economic global powerhouse of the future.”

The AVCA Academy will play an instrumental role in catalysing investment into the asset class by deepening the capacity of African institutional investors to navigate investing in private equity, venture capital and private credit, and by supporting fund managers through their capital raising, deployment and exit journey. Programmes delivered through the AVCA Academy will have Continuing Professional Development (CPD) certification, demonstrating the credibility of the institution and its programmes.

Given the lack of diversity of institutional investor capital in Africa-focused PE and VC funds to date, there is a critical need for the AVCA Academy. Participants will be able to discover the opportunities and challenges involved in investing in Africa through real-life, practical case studies. Through the synchronised learning platform, participants will also be provided with detailed resources to support independent learning.

The AVCA Academy is an educational institution that will provide bespoke content through an immersive and blended learning approach for both remote and classroom-based participants involving subject matter and industry experts from across Africa.

The CEO added that “African institutional investors currently have less than 1% invested in private equity as an asset class so there is work to be done to unlock domestic capital. African pension funds have an additional US$29 billion to invest in PE which could double the size of the African PE industry.”

The AVCA Academy is currently sponsored by FSD Africa – a specialist development agency supported by UK Aid, working to build and strengthen financial markets across sub-Saharan Africa.

Evans Osano, Director – Capital Markets at FSD Africa said, “FSD Africa is pleased to partner with AVCA on this innovative e-learning platform. Leveraging an e-learning platform to deliver high-quality training and knowledge development is particularly relevant given the ability to transcend barriers such as travel restrictions due to COVID-19 and high costs associated with physical training sessions. We believe it will be essential in unlocking a growing institutional investor base in Africa to invest in transformative sectors through private capital markets. Through the Africa Private Equity and Debt Programme, FSD Africa is also supporting research, the development of policy and regulations aimed at improving access to private capital and supporting demonstration transactions.”

According to AVCA’s 2020 Annual African PE Data Tracker, between 2015 and 2020, the total value of the 1,257 PE deals reported in Africa reached US$21.7bn. While deal volumes have maintained an upward trend, their value has gradually eased, suggesting growing investor interest despite smaller deal sizes. Yet, this is a small step on a long journey to increased growth of the asset class.

Through this institution, fund managers will receive support around fundraising, value creation, and ESG, while institutional investors will receive support for fund manager evaluation, governance, and reporting. Professional services firms including law firms, fund administrators and industry regulators will also be provided with legal agreement training, GP/LP relationship management, and regulator training.

“The kind of training provided through the AVCA Academy will help catapult private investment in Africa and ultimately boost gross domestic product (GDP) and economic growth across the continent,” Mustapha-Maduakor added.

Kelechi Deca

Kelechi Deca has over two decades of media experience, he has traveled to over 77 countries reporting on multilateral development institutions, international business, trade, travels, culture, and diplomacy. He is also a petrol head with in-depth knowledge of automobiles and the auto industry

Venture Capital in Africa Hits High in 2020 – AVCA Report

July 8, 2021

Venture capital investment in Africa soars to record levels in 2020 as global investors demonstrate confidence in key sectors, according to a new African Private Equity and Venture Capital Association (AVCA) report. According to the Report, the volume of total reported venture capital deals in Africa in 2020 rose to 319 from 140 in 2019; Financials remains the most attractive sector for VC investment, followed closely by Information Technology; Despite the decrease in value of VC deals in 2020, African entrepreneurs continued to innovate throughout the pandemic.

AVCA Chief Executive Officer, Abi Mustapha-Maduakor, — AVCA Chief Executive Officer, Abi Mustapha-Maduakor

African Private Equity and Venture Capital Association (AVCA), the pan-African industry body which promotes and enables private investment in Africa, recently announced the release of its second Venture Capital in Africa report.

Mapping Africa’s startup landscape between 2014 and 2020, the report provides data and analysis on venture capital (VC) deal activity in Africa in 2020 along with information about the types of investors that have participated in those deals. The report also includes case studies covering prominent investments across Central, East and North Africa.

Startups in Africa are changing the continent’s economic landscape and creating new market opportunities, having raised a remarkable US$1.1 billion in what was undoubtedly a challenging year for private investment globally.

2020 saw a 2.2x increase in deal volume compared to 2019, corresponding to more than a third of the 933 reported VC deals in Africa between 2014 and 2020.

The Venture Capital in Africa Report acknowledges the vital role of technology in driving economic growth in Africa, as 90% of all reported VC deals between 2014 and 2020 were in technology-enabled companies operating across a variety of sectors.

Financials accounted for the largest share of VC deals by both volume (22%) and value (26%) from 2014 – 2020, with Information Technology (18%) and Consumer Discretionary (16%) accounting for the second and third largest share of VC deals by volume within the same timeframe.

In terms of deal value, Consumer Discretionary sectors accounted for 22% of the total value of reported VC deals in Africa between 2014 and 2020, demonstrating investors’ interest in businesses that are likely to remain resilient during economic crises by responding to pertinent consumer needs.

This includes e-commerce platforms which represented 39% of companies operating within the Consumer Discretionary sector that received venture capital funding in 2020.

The majority of VC funding in Africa is concentrated in early-stage rounds as seed financing accounted for 33% of the total number of reported VC deals between 2014 and 2020, even though these transactions accounted for only 6% of the total deal value.

Series A and Series B funding rounds together accounted for 43% of the total value of early-stage deals, and 68% of reported deals were below US$5mn in value.

South Africa remains a hub for VC activity in Africa, accounting for 21% of deals by volume.

However, Egypt is increasingly gaining popularity among investors, attracting the second-highest (16%) share of country-specific deals in Africa in 2020, likely due to the Egyptian government’s prioritization of policies that encourage innovation and empower entrepreneurs.

While FinTech continues to attract a significant share of venture capital funding, the report finds that technology is increasingly playing an essential role in transforming traditional sectors, including Health, Agriculture, Education and Energy, as HealthTech, EdTech and AgriTech demonstrated significant growth in 2020.

AVCA Chief Executive Officer, Abi Mustapha-Maduakor, said: “The private sector remains essential towards sustained economic development of Africa, and it is great to see that investors and policymakers continue to believe in the role of small and medium-sized enterprises in driving innovation and creating sustainable and inclusive growth on the continent.”

She added that this second edition of AVCA’s report on venture capital is timely given the rate at which the startup ecosystem in Africa is growing and attracting diverse private capital from both foreign and domestic investors.

“African entrepreneurs are building the future, one innovative idea at a time, and the world is watching. As the pan-African industry body championing diverse private investment into the continent, AVCA will continue to provide important data showcasing Africa as a prime investment destination with ample opportunity for financial return and impact.”

Kelechi Deca

Kelechi Deca has over two decades of media experience, he has traveled to over 77 countries reporting on multilateral development institutions, international business, trade, travels, culture, and diplomacy. He is also a petrol head with in-depth knowledge of automobiles and the auto industry

Kenya Leads in Attracting Venture Capital

June 29, 2020

Kenyan has made tremendous leap in attracting venture capital for startups in the country second only to South Africa. And this trend follows a recent ranking of start-ups in Afric which equally puts Kenya second to South Africa, and ahead of Rwanda and Nigeria on third and fourth respectively. This new report notes that between 2015 and 2019, Kenya accounted for 18 percent of the $3.9 billion total venture capital deals in the five-year period, translating to about $702 million.
South Africa led the continent at 21 percent and Nigeria was third at 14 percent, with the top three countries enjoying the advantage of being the financial centres of the respective regions.
Many firms looking to invest in the region base themselves in Nairobi, taking advantage of the city’s transportation links to global peers, lack of foreign exchange controls and an educated labour force.

The new report by the African Private Equity and Venture Capital Association (AVCA) on VC deals for the period shows that Kenya accounted for 18 percent of the $3.9 billion total VC deals in the five-year period, translating to about $702 million.

South Africa led the continent at 21 percent and Nigeria was third at 14 percent, with the top three countries enjoying the advantage of being the financial centres of the respective regions.

Many firms looking to invest in the region base themselves in Nairobi, taking advantage of the city’s transportation links to global peers, lack of foreign exchange controls and an educated labour force.

“In terms of countries, South Africa, Kenya and Nigeria have attracted the bulk of VC investments between 2014 and 2019, reflecting similar patterns to PE activity on the continent,” said AVCA in its inaugural report on venture capitals.

“Fintech dominates the African start-up scene, but afro-entrepreneurship has also exploded within the utilities, logistics and transportation, e-commerce, healthcare and agribusiness sectors.”

There were a total of 613 recorded VC deals on the continent in the five-year period, with 2019 being the standout year with 139 deals, valued at $1.4 billion , up from 69 in 2015 worth $400 million.

The distribution of the number of deals saw South Africa lead with 25 percent, followed by East Africa at 23 percent and West Africa at 21 percent.

Given the preference by VC firms for early stage investments, the majority of the deals ( 65 per cent) were valued below $5 million , with the median value of a deal in East Africa standing at $2.2 million.

Kenya’s investment climate has in the past five years improved due to efforts to simplify licencing procedures and cut the time it takes to set up a business. The country was ranked 56 in the World Bank’s Ease of Doing Business Index 2020, having improved from position 108 in 2016

Kelechi Deca

Kelechi Deca has over two decades of media experience, he has traveled to over 77 countries reporting on multilateral development institutions, international business, trade, travels, culture, and diplomacy. He is also a petrol head with in-depth knowledge of automobiles and the auto industry