Connecting Africa Podcast: S2 Ep. 6 – Breaking into VC

Africa's startup ecosystem is growing and so is the venture capital industry on the continent with many young Africans trying to make the move into what they see as the glamorous world of venture capital.

In this Connecting Africa Podcast we discuss why so many young Africans aspire to become VCs and our guest is Cindy Ai, co-founder of Dream VC.

Dream VC is an investor accelerator running remote community-driven venture capital fellowships specifically focused on the African continent.

Ai starts off by telling us a bit about how venture capital works and how her company is working to train the next generation of investors in Africa.

"The reason why we started focusing on the continent in particular is because we really see this as the final venture frontier. This means that the continent is one of the last ecosystems to discover venture capital, to really see this growth and explosion in tech innovation, and this means you have the opportunity to still mold things as they go.

"Some of the perhaps bad ethical practices or negative aspects of how venture capital has been done in other areas can still potentially be thwarted if we have the proper knowledge and infrastructure and resources in place and, above all else, a collaboration culture in place," she explained.

That led to a discussion about why so many young people want to get into VC and what is driving that interest. Ai shares her thoughts on the pros and cons of this trend, and also talks about the potential risks and benefits of having a large influx of talent entering the VC space versus that talent focusing on growing their own startups.

Gender smart investing

The conversation then moves to gender politics in the VC industry and how to change the gender imbalance and boost the number of women coming through the pipeline.

"I think the [VC] space does suffer from an ongoing multitude of issues, one of which is a pipeline issue. I think the high barriers to venture capital, the way it traditionally was set up, meant that only women from specific fields and specific positions of privilege were even able to break into it in the first place," Ai said.

She, however, believes that more recently we are starting to see women from more diverse backgrounds being included in the mix, possibly because it's easier to learn about investing now and easier to build a network.

"I really think the secret to unlocking this is more awareness, more trust building this and pipelining it from communities where women already have a high degree of trust and inclusivity with each other. But then at a macro-economic level that's a whole other question," she added.

She explained the rising trend of "gender-lens" investing and how that category of investment is growing on the continent.

The team also talks about the career progression of young Africans trying to get into the VC space and the growth trajectory they can expect.

That leads to a discussion about international VCs investing in Africa versus African-grown VCs and how the investment environment is shifting. Ai points out that at the moment many African funds still have international investment partners, so the profits often still end up outside of the continent.

"It's still incredibly hard for [VCs] to actually close a fund and deploy capital. I think we oftentimes talk about how hard it is for African entrepreneurs to raise funding – and I think that is a very nuanced problem – but I think raising a VC fund is even harder than raising for a startup," she said.

Want to know more about African startups and new innovations on the continent? Check out our Innovation Hub here on Connecting Africa.

This season on the podcast we will be interviewing more startup founders and interesting personalities in Africa's tech ecosystem, so look out for more episodes coming soon.

If you want to catch up on all the previous episodes you can find the podcast on Apple Podcasts; Spotify; Google Podcasts or find other podcast platform options on our main page on Spotify for Podcasters.

You can also find the podcast hosts online here:

Paula Gilbert (@paulajgilbert)

Tobi Lafinhan (@TobiLafinhan)

Matshepo Sehloho (@tsokamatshepo)

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