African startups are in a special position because they can influence innovation and as a result, offer various solutions to some of the most demanding challenges faced across the continent. According to Abu Cassim who is the founder as well as director of Jozi Angels, which is a network focusing its investment in startups at an early stage, it is important to have an enabling environment for the startups to thrive. During the latest Africa Innovation Summit in Kigali, Rwanda, growing venture capital (VC) across Africa was the main point of discussion considering the fact that there are untapped opportunities in the VC frontier markets such as Kenya, Nigeria, and South Africa as well as other international emerging markets like Mexico, Poland, UAE, and Indonesia.
The prosperous development of Africa’s VC depends on various factors such as identification of more sources of funding to facilitate co-investment for instance, amalgamating government and corporate funding. Moreover, Jozi Angels’ Cassim also asserted that startups could massively gain if every effort are aligned and resources pooled from every corner of the continent. Therefore, forums such as the Africa Innovation Summit could prove their significance because it brings African pioneers together hence developing networks and relationships that can go a long way into creating mutual goals as well as pan-African network, which will be advantageous to startups and investment communities.
Additionally, regulations and tax reforms can offer the continent’s investment landscape a boost. For example, South Africa legislation introduced amendments on its Tax Act in 2009 and 2014 and these amendments changed some tax incentives for investors who can make claim deductions for funds invested in approved venture capital funds. As a result, by November 2017, there were more than 60 registered S12J VC funds in South Africa, and investment by the VC sector is at a 23% annual growth. Furthermore, during the discussion at the forum, other contributors such as Nairobi-based I-DEV International’s Heloise Zimmermann added that success stories of various startups could offer more capital to the continent and leveraging investors will allow the startup environment to benefit from the business network an investor could bring.