The Insider’s Guide to Venture Funding for African Entrepreneurs
African entrepreneurs are leading a transformative wave of growth, particularly in startup funding and investment deals. Over the past year, startup funding across the continent has quadrupled, and the number of funding deals has more than doubled. Mega-rounds exceeding $5 million, once rare, are now increasingly common. According to WeeTracker’s 2018 venture investment report, African startups raised a record-breaking $725.6 million across 458 deals.
The ten largest rounds alone accounted for $457 million, or 61% of the total funding. Yet, beyond these headline-grabbing deals, 30 startups also broke the $5 million threshold, including Yoco and Flutterwave, two companies founded by Harambeans. This clear upward trajectory signals an exciting shift in investor confidence. As Africa’s reputation for delivering outsized returns grows, global investors are diversifying their portfolios to include African startups—a trend likely to accelerate.
The 2019 Boom Has Begun
This momentum has carried into 2019 with Andela’s $100 million raise led by Al Gore’s Generation Investment Management. Co-founded by Iyinoluwa Aboyeji H’10, Andela’s landmark deal is one of the largest single funding rounds on the continent and underscores a broader truth: the global investment community is waking up to Africa’s potential.
But securing investment is just the beginning. Every successful entrepreneur knows that choosing the right investors is just as critical as securing capital. A bad fit can derail a promising startup; the right partner can unlock untold potential. The challenge lies in finding investors who align with your vision, offer strategic support, and bring resources that extend beyond their checkbook.
Qualifying Investors: The Art of Asking the Right Questions
While many first-time founders think of investment negotiations as one-sided, seasoned entrepreneurs know better. Investors might write the checks, but they’re also betting on you—your vision, execution, and potential to deliver returns. It’s up to you to ensure they’re the right partner for the journey ahead.
From the experience and insights of seasoned Harambeans who’ve raised millions, we’ve distilled the 10 most strategic questions African entrepreneurs should ask investors to ensure a winning partnership:
Top 10 Questions African Entrepreneurs Must Ask Investors
10. What excites you most about investing in Africa?
Africa is a high-growth frontier, but motivations vary widely. Some investors are drawn by the opportunity to pioneer in an untapped market; others are driven by social impact or sustainability goals. Understanding why an investor is here—beyond their dollars—will help you uncover their priorities and tailor your pitch. This question can also expose red flags early if their goals don’t align with yours.
9. What’s your track record in my industry?
Sector experience matters. Investors who’ve succeeded in your space bring insights, networks, and operational expertise. Are they active players or curious tourists? If they’ve backed competitors or adjacent businesses, it’s a sign they understand your market—and could help you move faster.
8. What’s your annual investment budget, and how is it allocated?
An investor’s commitment level is often tied to their financial bandwidth. Understanding their budget provides context for their capacity to follow on in future rounds or add meaningful value.
7. How many deals do you close annually, and what’s your typical check size?
If an investor writes small checks but spreads them across dozens of companies, they might lack the bandwidth for hands-on involvement. On the other hand, a focused portfolio often means deeper engagement. You’ll also want to know where you stand in their pipeline—if their annual budget is nearly spent, negotiations might need to be timed accordingly.
6. What metrics guide your investment decisions?
Different investors track different KPIs. Some prioritize customer growth; others emphasize profitability or market size. Knowing their benchmarks helps you present your data in a way that resonates. It also clues you into how they’ll measure your success post-investment.
5. What’s the investment you’re most proud of, and why?
This question uncovers their values and decision-making process. Are they proud of a unicorn exit or an underdog story that defied the odds? Their answer gives insight into how they’ll perceive and support your journey.
4. Do you prefer leading or following investments?
This is crucial to structuring your round. A lead investor sets terms and anchors your raise, often influencing other investors to join. If they’re a follower, you’ll need to identify and secure a lead elsewhere—or risk your round stalling.
3. Who are your preferred co-investors?
Investors often partner with a consistent network of co-investors. Asking this question can expand your pool of potential backers and strengthen your round’s credibility.
2. What value do you bring beyond capital?
The best investors are more than financiers—they’re partners in growth. They can open doors to strategic alliances, provide operational guidance, and help you navigate challenges. Be specific: Do they offer expertise in scaling? A track record in your region? Access to follow-on funding?
1. Have you invested in African ventures before?
For many global investors, African startups represent uncharted territory. If you’re their first foray into the continent, you have an opportunity to shape their narrative and guide their expectations. Adetayo Bamiduro H’15 of MAX NG successfully leveraged this approach with investors like Techstars and Shell, who made their first local investments in West Africa through his company.
Building Africa’s Future, Together
The questions you ask signal your seriousness, preparation, and vision. Investors want founders who approach funding with the same rigor they bring to running their business. By qualifying your investors and aligning on goals, you set the stage for partnerships that drive both financial returns and transformative impact.
For African entrepreneurs, the stakes are high—but so is the opportunity. By choosing the right partners, you’re not just building a company—you’re shaping the future of a continent.