43% of Angel Investors Prioritize High-Growth Ventures as Ideal Targets – Survey
A recent survey by the African Business Angel Network (ABAN) sheds light on the preferences and priorities of Angel investors actively supporting Africa’s burgeoning startup ecosystem. The findings provide insights into the types of businesses angels favor, their investment instruments, and the ticket sizes they typically deploy.
The survey reveals a clear preference among angel investors for disruptive, scalable, and proven business models. Nearly half (43%) of the respondents identified high-growth ventures, such as startups, as their ideal investment targets. Additionally, 68% showed a strong inclination toward business models that generate revenue from both companies and consumers. Demonstrable market traction, rather than immediate profitability, also holds significant appeal, with 50% prioritizing startups that have validated their market presence.
Angels’ investment decisions are influenced by additional factors such as the company’s operational focus and demographics. A vast majority (90%) prefer businesses operating in urban areas, while 79% favor companies that demonstrate strong gender representation among co-founders, executives, employees, partners, and customers.
A company’s capital structure plays a crucial role in determining its attractiveness to angel investors. Due to the relatively small cheque sizes typically written by angels, startups often require multiple investors to secure adequate funding. However, this can sometimes lead to concerns about overvaluation and excessive founder equity dilution—issues flagged by 73% of respondents as significant deterrents.
When it comes to investment instruments, the survey indicates that angels are willing to take on high risks for potentially long-term rewards. Equity investments dominate, with 50% of respondents using tools such as Simple Agreements for Future Equity (SAFEs) and shareholder agreements. On the other hand, 28% of angels prefer debt instruments, such as loans or convertible notes, which offer shorter maturity periods and potentially faster returns.
Investment accessibility is another key highlight of the survey. Most angel investors in Africa deploy ticket sizes ranging between $1,000 and $25,000, making angel investing an accessible entry point for individuals looking to support innovative ventures.
ABAN’s survey underscores the pivotal role angel investors play in shaping Africa’s startup ecosystem. By aligning their strategies with market needs and supporting scalable, diverse, and high-growth businesses, angels are not only driving innovation but also contributing to the continent’s economic and social development.
