In 2021, an estimated $2.8bn is set to be invested in African start-ups by venture capitalists. As has been the case in previous years, a sizable portion of the funds are likely to go to economies that have long dominated funds mobilisation such as Egypt, Nigeria, and Kenya among others. Not that odds are stacked against economies such as Rwanda, but countries such as Nigeria, South Africa, Egypt already rank favourably under key indicators that aggregators and indexes show attract the highest number of venture capitalists and funds. Among the factors that currently influence venture capitalists’ decisions include having demographic advantage which often serves as an indicator of the market potential of the start-ups. Other key factors that influence suitability of attracting venture capitalist is ease of doing business and admission of foreign investors. Rwanda already ranks favourably on aspects such as eased processes for foreign investors to set up offices and settle in the country have ability to attract more capital as it is the more prudent way that Seed stage investments are made. Rwanda is also working in institutionalizing and commencing the implementation of the startup act aimed at supporting the entrepreneurship and business ecosystem in the country, which could further ease ability to raise capital, set up companies and deploy capital. With that, Rwanda is well placed to be competitive in attracting capital in multiple factors with the exception of demographics. While not much can be done to increase the population from the current about 13m, there is an opportunity to make the most of the regional integration and warm ties of some sister nations such as Congo. The East African region is estimated to have a population of about 170m people and up to 250m, Congo included. This would position Rwanda ideally to rival some of the economies that have long been a darling of venture capitalists. However, for this to happen, local start-ups ought to start positioning their products and services for a regional market beyond Kigali and Rwanda. This among other things calls for them to take time to understand the region, the needs as well as practical solutions.
