DAWN July-August 2020

Page 80

Investment

Silicon Valley has Deep Pockets for African Startups – if You’re Not African By Larry Madowo

“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 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. 80

July-August 2020

G l o b a l heavyweights such as Goldman Sachs, Stanford University, Chan Zuckerberg Initiative, Andreessen Horowitz and Sequoia Capital have all invested in startups Jesse Ghansah: ‘The yardstick used t started by white white, so having a white founder on founders in Africa more frequently than they have invested in firms led by black Africans.

White privilege Advantages that white entrepreneurs have include having a safety net to take time o 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 (www.kiva. org) and Branch International (https://branch.co), 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

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Articles inside

Literature Beyoncé's "Black Is King" Trailer Features Lupita Nyong'o, Jay-Z, and More

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pages 96-99

African Continent and the World Resource Vault

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Ghana Library Showcases Black and African

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Kenya’s 3D Printing Community Making

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page 92

Covid-19 Equipment Banking On Thorium

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Alphabet’s Loon Balloons Provide their fi rst Commercial Internet Service in Kenya

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Botswana: Lab Tests to Solve Mystery of Hundreds of Dead Elephants

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pages 89-90

Tesla Talent Call Out

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Changing the African Narrative

5min
pages 86-87

Startups – if You’re Not African It is Time to Fund the Future

5min
pages 84-85

Silicon Valley has Deep Pockets for African

8min
pages 80-83

Even Though Less Than 1% of Venture Capital

6min
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Mozambique: The Next Great LNG Player

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Africa's Largest Oil Refi nery Opens Next Year

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1st Ethiopian-Assembled All-Electric Hyundai

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Zambia: Zanaco to Enter Micro-Finance as Part of Digital Push, says CEO

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How France Extorted Haiti for one of the Greatest Heists in Geopolitical History

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Republic of Zambia

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The History of Black Management Reveals an Overlooked Form of Capitalism

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The Startup Movement is Globalizing: New Report Proves It

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Kenya and Nigeria are Leading Africa’s Push to Start Taxing Silicon Valley’s Global Tech Giants

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