On 2 August, we had the pleasure of hosting another insightful edition of Angel Connect, an event that brings together the Academy’s alumni community, and angel investors from business angel networks across the continent to connect, engage and share insights.

Gathering under the topic, “making sense of the global VC turmoil for an African angel’s investing strategy,” the event featured a panel discussion with Andreata Muforo (TLcom Capital LLP), Khaled Ismail (HIMangel), Max Cuvellier (Africa: The Big Deal) and was facilitated by our very own Stephen Gugu (ViKtoria Angels).

These are the top key takeaways from the discussion (compiled by Stephen Gugu):

  1. There is no devaluation. We are course correcting to what the norm should have been all along. 
  2. The numbers so far show that the continent is weathering the storm. Funding for 2022 YTD (July 2022) is 110% up from 2021. There has been growth in each month in 2022 as compared to 2021 apart from July 2022 (down 20%). This should not be a concern yet for the overall funding to be raised in 2022. 
  3. This does not mean that all startups are having it easy to raise cash: over $50m deals account for more than 50% (proxy for Series C) of total funds raised. $10m to $50m are at 30% (Proxy for series B) with less than $10m deals (proxy for Series A, Seed and Pre-seed) deals contributing to the rest. 
  4. Angels invest their own cash while VCs are investing LP money. It is easier for angels to stay out of the market if the terms do not make sense than for VCs who are investing LP cash with set timelines to invest and exit. 
  5. One of the reasons the continent has remained resilient is because of the opportunities in the market. This is not the only one, however; other factors include the low base effect (the continent contributes to less than 1% of global VC funding), DFI investments into funds which may not be as return-focused as private money and hence more resilient, and increased numbers in local investors – both angels and VCs etc. 
  6. The market is tough and will be tougher for companies whose unit economics do not make sense. As a founder, you should double down on ensuring you are not in this category. 
  7. Fundraising is going to take longer, and investors will be more stringent during due diligence – so brace yourself as a founder. 
  8. If you had raised money when the tide was high or in with valuations that do not make sense in the current environment, not all is lost. Focus on growing into the valuation you got and surpassing it. 
  9. As an angel avoid FOMO (fear of missing out). As you look to make investments in this season, do not ignore the less sexy sectors like waste management, education, agriculture, healthcare and other sectors. These are the new diamonds in the rough!

Want to catch the full discussion? Watch the recording of the event below: