Over the past few years, African startup ecosystems have celebrated a few large exits to international firms. But it isn’t often that we get to unpack the realities of exiting from the perspective of the angel investor. How does it work in reality? How should angels consider an exit before making an investment?
The final masterclass of our recent International Tech Hub cohort took place on 25 November, and David van Dijk sat down with seasoned investors to unpack one of the most crucial (and perhaps mis-represented) stages of investing in businesses – the exit!
With diverse investing experience from across the continent, the panel shared tips on how exits for angel investors play out in reality, drawing on examples from their own experience, portfolio and a few high profile exits that have made headlines in the past few years.
The panel discussion featured:
Joy is an experienced Portfolio Manager and angel investor, and in 2016 led a syndicate to invest in Twiga Foods. In 2018, Joy and her partners made the decision to exit through a secondary sale to another investor during a US$10 million Series B raise. Two years later, and Twiga recently announced a Series C investment of $50M. When asked if she resents this early exit, Joy says “No! When there was so much interest, we realised that we were out of our area of expertise as early stage investors. We believed in the company, but we knew that the stages where we could invest had passed.”
The African Angel Academy recently wrote a case study on Joy’s investing journey with Twiga Foods. Download the case study here.
Keet van Zyl
Keet van Zyl is Partner at leading South African Venture Capital firm, Knife Capital. He also invests as an angel himself. Speaking with both perspectives in mind, Keet says: “Investing is easy, but building businesses is as hard as it’s ever been. From the get go, as the investor you need to understand who might want to buy the company and the strategic objectives for an acquisition. It will not be for revenue, so you need to understand the value of the underlying business and build that value. And don’t just hope for an exit!”
Danai Musanda is currently Senior Investment Associate at HPE Growth (private equity) but has extensive experience in early stage investments, and is an active spokesperson for impact investing in Africa. Danai reiterates a point made by Keet when she says “always have the exit as your northstar when considering investments”. For the broader benefit of the ecosystem, what we want is more capital in the market. Therefore, we want to attract the large institutional investors that are outside of Africa. And all they want to know is “what is the exit story? When you invest, you should always have your northern star. It is easy to invest, but value creation is harder.”
A big thanks to our panel for participating!
For more pearls of wisdom and first-hand experience on exits, watch the replay of the masterclass below: