A recent survey conducted by the African Business Angel Network (ABAN) reveals that 77% of angel investors in Africa allocated less than $25,000 to startups between 2022 and 2024. This pattern highlights a cautious and risk-averse approach within the continent’s growing startup ecosystem.
The findings, based on responses from over 110 angel investors who actively support African startups, were compiled in collaboration with Briter, a business analytics platform specializing in startup funding data. While the majority of angel investments remain below the $25,000 mark, the report notes a gradual rise in commitments between $50,001 and $250,000, although precise figures for this trend were not disclosed.
Angel investment is a critical funding source for early-stage startups, particularly in regions where access to venture capital is limited. However, the high-risk nature of these investments—often placed in unproven business models—can deter potential investors. Startups, meanwhile, rely heavily on such backing to scale operations and drive growth.
To address these challenges, the report emphasizes the importance of investor education and access to reliable data. These measures can help mitigate perceived risks and enable more informed decision-making among investors.
African angel investors employ varied strategies tailored to their risk tolerance and goals. Among those surveyed, 50% prefer equity agreements such as Simple Agreements for Future Equity (SAFE), a choice often favoured by risk-tolerant investors seeking substantial long-term returns. Conversely, 28% of respondents opt for debt instruments like convertible notes or loans, which offer quicker returns and shorter timelines. These options appeal to more cautious investors looking for faster payoffs while maintaining a stake in early-stage ventures.
The report highlights a shift in investment dynamics, with 46% of surveyed investors favouring structured vehicles like angel syndicates. These collaborative models provide benefits such as shared risk, pooled resources, and broader access to investment opportunities. Meanwhile, 28% of investors blend individual and collective strategies, and 26% continue to favour independent investments.
Maha Mandour, CEO of COREangels MEA, underscores the value of systematic approaches: “Scouting and filtering startups, along with thorough due diligence, is essential for achieving stronger returns in angel investing.”
Angel investors in Africa often prioritize impact over profit. According to the ABAN report, 59% of respondents are motivated by the potential to create jobs and alleviate poverty, while 19% focus on empowering youth and women. Additionally, 10% are driven by funding initiatives aimed at addressing climate challenges.
Reflecting broader venture capital trends, 42% of investors are drawn to technology-driven startups. Sectors like fintech, e-commerce, and energy dominate the landscape, with venture capitalists injecting over $1.8 billion into these industries in 2024 alone. Despite this focus, many angel investors maintain diversified portfolios. About 25% of respondents adopt a sector-agnostic approach, showing interest in industries ranging from agriculture to healthcare.
Between 2008 and 2023, African startups collectively received $35 million in funding from angel investors. As the ecosystem matures, more angel networks are emerging to support investors by offering training, providing access to better data, and fostering informed decision-making. These advancements are demystifying the angel investment process, encouraging broader participation and more strategic investments.
Main Image: Tech In Africa
