Marlon Nichols took to Afrotech last week to talk about the importance of building relationships when entering new markets. “One of the first things you do when you go to a new market is you have to meet new players,” he said. “For example, what do people need? What's hot right now?”
Mr. Nichols is a co-founder and managing general partner of MaC Venture Capital. MaC Venture Capital has just raised $150 million Fund III and has invested more than $20 million in at least 10 African companies. He first invested in the African continent in 2015, before investing in African startups became a trend. He said the investment helped the company increase its presence in Africa.
African startups raised between $2.9 billion and $4.1 billion last year. That's down from $4.6 billion raised in 2022 to $6.5 billion, despite a global venture slowdown.
He found that the biggest sectors ripe for innovation in Africa are healthtech and fintech, which are being held back from being the continent's two largest industries due to underfunded payment infrastructure and a lack of health systems. It has become.
Today, many of MaC Venture Capital's investments are in Nigeria and Kenya, thanks in part to the strong network that Nichols' firm has built. Nichols said people will start making connections with other people and foundations that will help them build a network of trusted advisors. “Once the deal comes in, I can look at it and pass it on to all these people who know from a first-hand perspective,” he said. But he also said that these networks enable angel investing in startups, which is also a way to enter the market.
Although funding is dwindling, there is a glimmer of hope. A decline in funding was expected as investors exited, but at the same time investors were looking beyond the four biggest African markets of Kenya, South Africa, Egypt and Nigeria. It spread its capital to French-speaking Africa, and deal flow began to soar, putting it on par with the “Big Four.”
While the number of early-stage investors is starting to increase in Africa, Nichols said there is a growing need for later-stage companies to enter the market, investing from Series A to C, for example. “I believe the next great trade relationship will be with countries on the African continent,” he said. “So we have to plant the seeds now.”