Many investors are skeptical about Africa. Many are skeptical about venture after the fall in tech. Why then am I excited about investing in tech startups in Africa?
For context, I was Chief Strategy Officer at AngelList (2012-2019), made my first investment in the continent in 2017 (Ajua), and have been an advisor at Pariti since early 2021.
I joined AngelList as a very early employee, built and launched AngelList's venture platform, and grew it for 7 years alongside some amazing coworkers. While there, I had the inside view into how VC actually works and we changed the direction of the industry in the US and around the world. Today, AngelList has $15B under management, over 250 unicorns in its portfolio, and investments in startups on every continent except Antarctica. Hundreds of VCs run their entire funds on AngelList and serve thousands of founders & LPs. Here’s just one recent tweet from a customer: This is why I <3 AngelList
There are two factors that helped AngelList take off in the 2010s and which are poised to impact Africa over the next 10 years. I believe Pariti is well positioned to take advantage of these factors to scale across the continent and beyond.
At the beginning of AngelList, we focused on "founders funding founders."
Angel investments are consistently the most impactful investments in a company's lifetime because (a) angels are often former entrepreneurs & operators whose capital comes packaged with hard-won experience ,and (b) because angel capital is generally the first investment that a company receives, giving it a chance to prove itself.
Beyond capital, the other key element of Silicon Valley's network is the existence of other audacious entrepreneurs. More people become founders and dream bigger because people they know have shown it's possible.
These network components are emerging in Africa and will only become stronger. Pariti has built a massive network of companies–nearly 1,000 have raised significant venture funding and many have scaled across countries, some even to become unicorns themselves. There is significant expertise in these networks about the specific challenges facing startups in Africa and how to overcome them.
Pariti helped launch Pando DAO, the gathering place for ambitious founders on the continent. I've been amazed at the quality of founders that have joined so far and the collaboration across the community. Seeing this only makes me more excited about the opportunities ahead.
Twenty years ago, building a technology company meant building your own data center, writing your own web server, etc. - just to get to the point where you could write the application you really wanted to write.
Today, infrastructure like AWS, web servers like Node, and frameworks like React mean that it takes far fewer resources to launch a technology company while the proliferation of cell phones and internet access means a small website can reach billions of potential users around the world.
These trends are continuing in Africa as more and more people have the ability to launch companies and more and more people have the ability to access and use technology.
Moreover, we’re seeing positive feedback loops via startups that are focused on building digital infrastructure to support entrepreneurs and accelerate this trend. Pariti is at the forefront of this, providing access to key resources, talent and capital for emerging startups.
With these tailwinds, local entrepreneurs will inevitably build world-class technology to solve problems and address local opportunities in ways that top-down product managers from international companies simply will not be able to.
Those two factors were enough to fund thousands of companies in the last 15 years in the US from an established base. However, Africa has a few additional tailwinds that will provide a boost to companies started here over the next decade.
Compared to 10 years ago, there is a lot more tech talent across Africa. Engineering, design, marketing, and management skills are developed at training organizations like Andela, at international companies with local offices like Microsoft and Google, and from members of the diaspora, trained overseas who are coming back to the continent–Yacob & Wossen at Pariti and Kenfield Griffith at Ajua are all examples. And we are now seeing the critical second generation of tech talent emerging as employees at companies like Paystack are going on to build their own companies.
Moreover, it’s easier than ever to access education and the best instructors in the world online - you only need an internet connection to learn to code on replit.com, to learn from Garry Tan on his YouTube channel, or to find innumerable examples of startup pitch decks and advice on Twitter.
Nowhere else in the world has demographics like Africa today. Across Africa, the median age is in the early 20s, GDP per person is growing, and life expectancy is increasing. Together, these are potent forces that have propelled one country after another through a fast S-Curve of economic and population growth. Every startup in Africa is operating in an environment where there are more, richer customers every year.
So, are there challenges ahead? Yes. Cynics can easily make a case not to invest in Africa. But cynics don't change the world; the best they can do is look smart from the sidelines. Fortunes are made when you're bold, right, and ahead of the crowd. It takes both optimism and drive to be a great founder or venture capitalist.
The entire Pariti team has that amazing optimism for the continent and the drive to have a massive impact. From the first time I met Yacob and Wossen, I could see that building this ecosystem is their true mission. I’m trilled to be part of their journey as Pariti continues to promote and push forward entrepreneurship in Africa.