Venture Capital & Web3 Start-Ups in Africa

Web3 technologies are gaining ground globally, and Africa is not left behind. With the increasing adoption of blockchain technology and cryptocurrencies, African startups are leveraging Web3 technologies to solve problems and create innovative solutions. However, African startups face several challenges, including limited access to funding, lack of infrastructure, and regulatory hurdles. Venture capitalists (VCs) can play a significant role in supporting African-based Web3 startups by providing funding, mentorship, and access to networks. In this article, we will explore how African VCs can support African-based Web3 startups.

Overview of Web3 Startups in Africa

Web3-based African startups are on the rise, and investors are taking note. According to Benjamin Dada, between June 2020 and July 2021, Africa’s cryptocurrency market grew by over 1,200% in value. Similarly, African Web3 and crypto-based startups have raised $139 million in 2022, a significant jump compared to zero a few years ago. Some of the notable Web3 startups in Africa include Fincra, Afropolitan, Lazerpay, Mara, Ayoken, Helicarrier, Xend finance, Jambo, Nestcoin, Pyppl, Canza Finance, Fonbnk, Valr, and OneWattsolar.

Despite the growing population of Web3 startups, African Web3 startups account for less than 1% of the total number of Web3 startups and have raised just about half a billion dollars in funding, compared to $88 billion raised globally. This presents an opportunity for African VCs to invest in African-based Web3 startups and support their growth.

How African VCs can support African-based Web3 startups

Provide funding

One of the significant challenges that African-based Web3 startups face is limited access to funding. African VCs can support African-based Web3 startups by providing funding. According to TechCabal, Adaverse, a $100 million funded accelerator, has backed notable African startups such as Zimbabwean-based pan-African freelance marketplace Afriblocks, crypto infrastructure startup Cassava Network, Defi startup Stakefair, and ten other African startups. The accelerator invests between $50,000 and $750,000 in startups. Similarly, the Celo Africa Web3 Fund, introduced by the Celo Foundation, helps scale African startup projects building on Celo and aid in blockchain and cryptocurrency adoption. The fund is open to all Africa-based startup applicants, but founders who are residents of the continent will be afforded preferential review. The Celo Africa Web3 Fund introduces startups to equity investors from venture capital (VC) firms, including Unicorn Growth Capital, Echo VC, Uncovered Fund, and Flori Ventures, a seed-stage VC investing exclusively in the Celo ecosystem.

Provide mentorship and support

African VCs can provide mentorship and support to African-based Web3 startups. According to Founders Factory Africa, the venture development firm helps African entrepreneurs grow and scale their businesses by providing startup finance, coaching, and assistance in industries such as fintech, health tech, and agri-tech. The mission of Founders Factory Africa is to find and nurture innovative entrepreneurs with the ability to effect good change and create value in the African market. Similarly, Ingressive Capital provides support for early-stage entrepreneurs in Nigeria and beyond Africa. The VC firm invests in, mentors, and supports entrepreneurs tackling critical issues in the fintech, edtech, and health tech industries.

Provide access to networks

African VCs can provide access to networks for African-based Web3 startups. According to Adaverse, the accelerator invests in African Web3 startups and provides them with access to its network of investors, mentors, and partners. Similarly, the Celo Africa Web3 Fund introduces startups to equity investors from venture capital (VC) firms, including Unicorn Growth Capital, Echo VC, Uncovered Fund, and Flori Ventures, a seed-stage VC investing exclusively in the Celo ecosystem.

All in All

African-based Web3 startups are leveraging Web3 technologies to solve problems and create innovative solutions. However, African startups face several challenges, including limited access to funding, lack of infrastructure, and regulatory hurdles. African VCs can play a significant role in supporting African-based Web3 startups by providing funding, mentorship, and access to networks. With the increasing adoption of blockchain technology and cryptocurrencies in Africa, we expect Web3 technologies to gain more ground on the continent. This widespread adoption will lead to the birth of multiple startups that will leverage the technology to create innovative solutions and solve problems.

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