Grace Ashiru
A recent survey conducted by the African Business Angel Network (ABAN) has revealed that 77% of angel investors in Africa have allocated less than $25,000 to startups between 2022 and 2024. This trend underscores a cautious and risk-averse mindset among investors within the continent’s startup ecosystem.
The findings, derived from a survey of over 110 angel investors who have supported African startups, shed light on significant patterns in early-stage funding. The report was compiled in partnership with Briter, a business analytics platform specializing in startup funding data.
While the majority of angel investments fall below the $25,000 threshold, the report also highlights a steady increase in the number of investors committing amounts ranging from $50,001 to $250,000. However, specific figures related to this trend were not disclosed.
Angel investment serves as a vital source of funding for early-stage startups, particularly in regions where access to venture capital is scarce. Yet, the inherently high-risk nature of these investments—often placed in untested business models—can create a sense of reluctance among potential investors.
Despite these hurdles, startups depend on financial backing to scale their operations and achieve substantial growth. The report emphasizes that providing better education and access to improved data could empower investors to make more informed decisions and reduce their perceived risk.
The report highlights the diverse strategies adopted by African angel investors, which vary based on their risk appetite and investment objectives. Among those surveyed, half choose to invest through equity agreements such as Simple Agreements for Future Equity (SAFE). This approach is often favored by risk-tolerant investors seeking substantial long-term returns.
On the other hand, 28% of angel investors lean towards debt instruments like convertible notes or loans. These options, with their quicker returns and shorter timelines, are particularly attractive to more cautious investors who prioritize faster payoffs while still retaining a stake in early-stage ventures.
The landscape of angel investing in Africa is undergoing a significant transformation. Investors are moving away from making decisions based solely on personal connections, leaning instead toward more collaborative methods. Currently, 46% of surveyed angel investors favor structured vehicles such as angel syndicates. These models offer advantages like shared risk, pooled resources, and access to a wider range of investment opportunities.
Meanwhile, 28% of investors adopt a flexible approach, blending individual and collective strategies, while 26% continue to prefer independent investments. Maha Mandour, CEO of COREangels MEA, emphasizes the value of a systematic approach, stating that “scouting and filtering startups, along with thorough due diligence, is essential for achieving stronger returns in angel investing.”
Angel investors in Africa are often motivated by more than just financial returns. According to the ABAN report, 59% of respondents are driven by the potential to create jobs and reduce poverty across the continent, while 19% focus on investments that empower youth and women. Meanwhile, a smaller yet notable 10% prioritize funding initiatives that address climate challenges.
The report also highlights a growing inclination toward technology-driven startups. Specifically, 42% of investors are attracted to ventures that harness technological innovation, reflecting a broader trend in the venture capital landscape. Sectors such as fintech, e-commerce, and energy, which are heavily tech-centric, continue to dominate, with venture capitalists investing over $1.8 billion in these industries in 2024 alone.
Despite this focus, many angel investors opt for diversified portfolios. Approximately 25% of respondents take a sector-agnostic approach, showcasing an interest in a broad range of industries across Africa, from agriculture to healthcare and beyond.
Between 2008 and 2023, African startups collectively received $35 million in funding from angel investors. As the ecosystem continues to develop, more angel networks are emerging to support these investors by offering training, providing access to better data, and facilitating informed decision-making. This progression is helping to demystify the angel investment process, enabling broader investor participation and more strategic choices.
Although the African angel investment sector is growing and evolving, the report underscores the critical need for education and data-driven decision-making to bolster investor confidence and encourage larger investments in the future. While the current cautious approach is understandable given the inherent risks, enhanced knowledge and stronger networks could ultimately pave the way for a more dynamic and robust angel investment landscape across the continent.
