Startups in Africa
We build new data on startups in Africa. We combine a continent-wide founder survey, an incentive-compatible experiment, and investment deal records matched to founders’ education and work histories. Africa’s startup ecosystem is concentrated in a few hubs and led by highly educated founders. Startups strongly prefer equity to debt and value local investors’ support. Yet equity is supplied mainly by foreign investors and flows disproportionately to foreign-exposed founders. About 80 percent of VC funding involves a foreign investor, and two thirds of funded founders have studied or worked outside Africa. A simple accounting framework shows that this foreignness reflects costly local equity, a thin pool of local entrepreneurs at the financing margin, and limited access of local entrepreneurs to foreign investors.
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Copy CitationEmanuele Colonnelli, Marcio Cruz, Mariana Pereira-Lopez, Tommaso Porzio, and Chun Zhao, "Startups in Africa," NBER Working Paper 35261 (2026), https://doi.org/10.3386/w35261.Download Citation
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