The African start-up scene has been rapidly developing in recent years and respected Silicon Valley VC firms and large tech companies are moving in on the market which could be regarded as a signal of opportunity. Yet a single investment is to be made by a Finnish VC firm into an African start-up.

The democratizing effect of technology and internet accessibility has led to the growth of innovation and disruption on the continent with the three selected jurisdictions for the thesis South Africa, Nigeria and Kenya leading the charge. Focusing on the three countries enables more a pragmatic analysis and thus applicable solutions. Analysing three different ecosystems also showcases the heterogeneity of the continent’s opportunities for VC firms.

The objective of the thesis is to establish the main blockers for Finnish VC firms when weighing the option of investing in Africa and then provide solutions to overcome the obstacles whilst taking a form of a roadmap to also show the process of investing in Africa and its peculiarities.

Because of the specificity and novelty of the subject matter, there is very little research specific to the objective to build on. To paint a picture of the different ecosystems’ comparative legal analysis and market analysis was utilized. The obstacles were identified through thematically analysed qualitative interviews with Finnish VC firms. The solutions to these obstacles were built on qualitative interviews with individuals that have experience from the African start-up scene.

Four obstacles rose above the rest in prevalence: mandates, being geographically far from founders, local expertise & networks and corporate governance & unknown risks. Based on the four obstacles a prescription of four actions that enable a Finnish VC firm to invest in Africa was developed: 1. Cannot be focused on early stage start-ups. 2. Needs to find a local co-investor. 3. Cannot have a mandate blocking Africa as an investment option. 4. Is a specialized fund. By adhering to these four “rules” a Finnish VC firm can venture to Africa with confidence.

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University of Helsinki, Faculty of Law
Master’s Thesis
International Business Law
April 2021
Jacob Pichna