ABAN Report Reveals 77% of African Angel Investors Have Committed Under $25,000 to Startups Between 2022 and 2024
A recent report by the African Business Angel Network (ABAN) highlights key trends in the African angel investment landscape, revealing that 77% of angel investors have committed less than $25,000 to startups between 2022 and 2024.
This cautious approach reflects the risk-averse nature of early-stage funding in Africa’s dynamic yet challenging startup ecosystem. The findings, based on a survey of over 110 angel investors who have backed African startups, were conducted in collaboration with Briter, a business analytics platform specializing in startup funding. The report emphasizes the critical role of angel investors in financing startups where access to venture capital is limited.
Although most angel investments remain below $25,000, there is a growing trend among investors committing between $50,001 and $250,000. While specific data on this trend is not provided, it suggests a gradual shift toward higher-value investments. Startups, often characterized by unproven business models, rely on such funding to scale and unlock their growth potential. However, perceived risks lead many investors to hesitate. The report suggests that improved data access and investor education could help mitigate these concerns.
African angel investors adopt various strategies influenced by individual risk tolerance and investment objectives. Fifty percent prefer equity investments through Simple Agreements for Future Equity (SAFE), appealing to those with a higher risk appetite seeking long-term returns. Conversely, 28% choose debt instruments like convertible notes or loans, which offer quicker returns and shorter timelines, making them more attractive to risk-averse investors.
The landscape is also shifting from individual, relationship-based decisions to more collaborative and structured approaches. Nearly half of the surveyed investors—46%—now prefer investing through angel syndicates, which allow for shared risks, pooled resources, and broader deal flow access. An additional 28% combine individual and collective strategies, while 26% still invest independently. Maha Mandour, CEO of COREangels MEA, underscores the importance of a methodical approach, stating that “scouting and filtering startups, coupled with due diligence, is key to achieving better returns in angel investing.”
Beyond financial returns, many African angel investors are driven by a sense of purpose. According to the report, 59% are motivated by the potential to drive job creation and poverty reduction, 19% focus on empowering youth and women, and 10% prioritize funding climate solutions. Additionally, technology-driven startups continue to attract significant attention, with 42% of investors favoring ventures leveraging technological innovation. This trend mirrors broader venture capital patterns, where tech-centric sectors like fintech, e-commerce, and energy dominate funding, receiving over $1.8 billion in 2024 alone. Despite this focus, 25% of angel investors maintain diversified portfolios, showing interest across various industries, including agriculture and healthcare.
Between 2008 and 2023, African angel investors collectively invested $35 million into startups. As the sector evolves, new angel networks are emerging, offering training, access to better data, and expanded resources to support investors. These developments are helping to demystify angel investing, enhance decision-making, and foster a more vibrant ecosystem. While the current cautious approach is understandable due to the inherent risks, increased education and data-driven strategies could pave the way for larger investments and greater confidence in the future. With ongoing collaboration and innovation, the African angel investment landscape holds immense potential for growth.
Source: Tech Cabal
