By Berger, Kasimir
African Business , No. 299
Venture capitalists are by nature nervous creatures. But they really start hopping about when it comes to Africa. The continent is perceived to be so risk heavy that none but the bravest venture capitalist even comes close to it. But is this perception real or only imaginary? Are venture capitalist losing out on golden opportunities?
This was the kernel of discussions during the African Venture Capital Association's (AVCA) annual conference, under the auspices of Prince Philippe of Belgium, which was held in Marrakech in April.
The event brought together many of the organisations that work in Africa on private sector development finance and, more specifically, those private and public bodies that are willing to invest hard cash into Africa.
The conference was attended by over 250 delegates, a marked increase from previous years, and was successful in bringing to the fore all the problems and successes which private equity and venture capital professionals are encountering in Africa.
Venture capital and private equity instruments are much used in the US and to lesser extent in Europe to ensure companies that are not quoted on the stock exchange can raise capital in order to expand.
Venture capitalists acquired almost mythical status in the dot-com boom years of the 1990s when money was flowing into small and medium sized internet companies and fortunes were created overnight. The bust that followed the boom created an investment drought, and confidence is now returning to the venture capital market. Since the late 1990s, the venture capital concept has shown signs of expanding into Africa.
The conference was well attended by a cross-section of private equity investors in Africa. Of course, South Africa remains the economic giant within this field, but much international capital comes from the development finance institutions (DFIs), most notably the IFC, a World Bank organisation. The Dutch FMO organisation is also a major player and was one of the main sponsors of the conferences. The recently created BIO of Belgium is also anticipated to take a major investment position in Africa.
Other conference participants of note were Aureos Capital, with a strong presence in East Africa; Emerging Markets Partnership, based in West Africa, and MarocInvest and Tuninvest from North Africa.
The concept behind venture capital investments is to assist the development of small and medium size companies, creating wealth and employment, but at the same time guaranteeing a return on investment to the venture capitalist providing the capital. …