DAWN

Page 70

Investment

Silicon Valley has Deep Pockets for African Startups – if you’re not African By Larry Madowo in New York Fri 17 Jul 2020 05.25 EDT

American venture capital and private equity is dominating Africa, but it’s mostly funding other white foreign founders as black entrepreneurs struggle to raise financing “SORRY FOR ASKING, but do you understand that the money belongs to the company and is not your personal fund?” When Jesse Ghansah saw this question in an email from a prominent white investor in San Francisco while fundraising for his first startup four years ago, he refused the deal. The 28-year-old Ghanaian entrepreneur, whose business is in Ghana, and his co-founder found it condescending when they were already in Silicon Valley’s prestigious startup development program Y Combinator. “I really doubt that a white founder would be asked the same. There are a lot of systemic issues as a black founder raising money abroad,” he says. His experience is not uncommon. While many were wary of speaking publicly, African entrepreneurs told the Guardian about humiliation, discrimination, stereotyping and sometimes racism that they endure in interactions with some of the world’s most prominent investors. North America-headquartered investors accounted for 42% of all African venture capital deals in the last five years, according to the African Private Equity and Venture Capital Association. Only 20% of venture cash came from Africa-based investors, forcing the continent’s entrepreneurs to seek support from westerners. Of the top 10 African-based startups that received the highest amount of venture capital in Africa last year, eight were led by foreigners, the Guardian’s analysis of public data revealed. In Kenya, for instance, only 6% of startups that 70

November-December 2021

received more than $1m in 2019 were led by locals, a Viktoria Ventures analysis found. In Nigeria, 55% of the big money deals went to local founders and 56% for South Africa. Global heavyweights such as Goldman Sachs, Stanford University, Chan Zuckerberg Initiative, Andreessen Horowitz and Sequoia Capital have all invested more frequently in African startups with white founders involved than they have invested in firms led exclusively by black Africans. White privilege Advantages that white entrepreneurs have include having a safety net to take time off to travel to Africa, backgrounds in elite education and better access to US-dominated funding funnels. “It’s obvious that I come from a privileged standpoint,” says Matt Flannery, a white American behind two Africa-facing startups, Kiva and Branch International, which have collectively raised more than $270m, according to the industry website Crunchbase. “I grew up in a relatively wealthy place, I went to Stanford University, I live in the Bay Area. I have dozens of venture capitalists as friends, and obviously that helped me raise money,” he told the Guardian from his home town in Oregon. Flannery said he has always been concerned about the funding gap in Africa and is working to expand access to financing for African entrepreneurs. Across the east African region, only 10% of all funding for startups went to local founders, according to a 2017 study by Village Capital. One exemplar is Twiga Foods, a seven-yearold startup that connects food producers and vendors to markets that has raised $67m. It was co-founded by Peter Njonjo, a Kenyan who was a senior Coca-Cola executive and an OxfordDAWN

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Articles inside

Milwaukee Bucks Celebrate NBA Championship with White House Visit

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How Masai Ujiri is Using Basketball to Transform the Lives of African Youth

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Jay-Z’s Marcy Venture Partners Closes Second Fund with $325 Million in Capital Commitments

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Silicon Valley has Deep Pockets for African Startups – if you’re not African

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Google will now off er African Startups more than No-Strings Cash and Offi ce Space

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African Stock Exchange/Bourse

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West African Regional Bloc Adopts New Plan to Launch Eco Single Currency in 2027

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Permanent Forum on People of African Descent

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Africa's First Chief Heat Offi cer - on a Mission

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The United Na ons Could Finally Create New Rules for Space

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Erdogan Meets Liberia's Weah, Leaders of Togo Burkina Faso

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Pfi zer Moves to Allow Cheap Versions of Promising Covid Pill

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Why it’s not Nearly Enough that Germany is Returning Nigeria’s Looted Benin Bronzes

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Biden Meets Kenya's President Uhuru Kenya a at the White House

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WHO-led Program Aims to Buy An viral COVID-19 Pills for $10

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How Tech and Agriculture can Help Africa’s Pandemic Recovery

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WHO Honors Henrie a Lacks for "Incalculable" Medical Breakthroughs

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Re red Black Surgeon is on Global Mission

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How Mobile Money Grew in Sub-Saharan Africa in the Last 10 Years

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Nigeria Launches Digital Currency ‘to Drive Economic Growth’

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USAID Delivers on Prosper Africa Goals with Africa Trade and Investment Program

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The Interna onal Cheat Sheet for Startups and Small Businesses

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Publisher's Message

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