“The language barrier is an inhibitor to international interest” which has kept valuations down in French-speaking countries, Haider says. She has been speaking with founders in francophone Africa over the last 12 months.
Venture capital interest in Africa has been surging, with a record $5.2bn invested on the continent in 2021, according to the African Private Equity and Venture Capital Association (AVCA). That means 51% of the total value of VC deals in Africa since 2014 was invested in 2021. Nigeria took first place in Africa last year, replacing South Africa as the continent’s biggest VC investment destination.
New investments by Global Ventures are likely to be focused on financial services, and technology for education, health and agriculture, Haider says. Such sectors tend to be defensive during economic downturns, she adds.
Dubai-based Global Ventures invests in emerging markets globally, and in April backed a fundraising round at Pakistani fintech Abhi. In Nigeria, start-ups are now over-valued in absolute terms, Haider says. Senegal is one possibility that could be considered, and Global Ventures is also looking at South Africa and east Africa as candidate areas for possible investment, she says.
- The firm has 17 portfolio companies in Africa, concentrated on Nigeria and Egypt.
- Global Ventures, which has also invested in Kenya and Rwanda, is focused for now on making follow-on investments in Africa.
- Any new stakes may have to wait until the fourth quarter or early in 2023, Haider says.
Egypt expansion
Egypt remains the smallest of Africa’s “big four” venture capital markets, but was the fastest-growing in the first quarter, Haider says. The firm’s investments there include Buseet, a subscription-based employee transportation network in Cairo, B2B e-commerce marketplace Cartona, food-tech startup Elmenus and fintech Nowpay. The firm in May increased its investment in Egyptian fintech Paymob as part of a $50m funding round.
Investments in Nigeria include stakes in healthtech company Helium Health, low carbon transport platform Max, fintech TeamApt and medicine distributor Remedial Health. With the exception of Remedial Health, those companies are now all trying to expand to Egypt. “That’s representative of a trend in Nigeria,” Haider says. “Egypt is the market where they want to move next.” Nigeria is becoming increasingly competitive, Haider says, pointing to “similar dynamics” shared by Lagos and Cairo. “People love a mega city.”
- The risk of further naira weakness is part of the reason for the Nigerian interest, Haider says. “Being able to diversify from naira-based revenue is definitely important.”
- Nigerian companies who enter Egypt will also get access to a new class of Egypt-focused investors, Haider says.
AVCA points to new Egyptian legislation introduced in September 2021 permitting the central bank to allocate banking licenses to fintech and digital commerce firms as a factor which has increased the country’s appeal.
Egyptian startups are the most accelerated on the continent, with 39% having taken part in some kind of acceleration or incubation programme, AVCA says.
Bottom line
Venture-capital firms and start-ups are seeking new markets outside an increasingly competitive Nigeria.
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