Investing in African Startups: Building Relationships and Seizing Opportunities

Marlon Nichols, the co-founder and managing general partner at MaC Venture Capital, recently shared valuable insights at AfroTech on the significance of building relationships when venturing into new markets. According to Nichols, connecting with key players and understanding the market needs are essential steps in making successful investments.

MaC Venture Capital, which recently closed a $150 million Fund III, has been actively investing in African startups, with over $20 million deployed in at least 10 companies on the continent. Nichols emphasized the importance of establishing a presence in Africa early on, citing his first investment in 2015 as a pivotal moment that helped him establish a foothold in the region.

The African startup ecosystem witnessed a slight decline in funding last year, with investments ranging from $2.9 billion to $4.1 billion. Despite this dip, sectors such as health tech and fintech continue to show promise, driven by the need for innovative solutions in payment infrastructure and healthcare systems.

Nichols highlighted Nigeria and Kenya as key investment hubs for MaC Ventures, attributing their success to a strong network of partners and advisors. By cultivating relationships within the startup ecosystem, Nichols and his team have been able to identify promising opportunities and provide support to budding entrepreneurs.

While funding may have slowed down, there is optimism in the market as investors explore opportunities beyond the traditional hotspots of Kenya, South Africa, Egypt, and Nigeria. Francophone Africa, in particular, is emerging as a new frontier for investment, with a rise in deal flows attracting attention from venture capitalists.

As more early-stage investors enter the African market, Nichols believes there is a growing need for later-stage firms to participate in funding rounds from Series A to C. By nurturing relationships and investing in the continent’s burgeoning startup ecosystem, Nichols envisions a prosperous future for trading relationships with African countries.