Startups in Africa

Emanuele Colonnelli, Marcio Cruz, Mariana Pereira-López, Tommaso Porzio and Chun Zhao

No 35261, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: 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.

JEL-codes: F0 G0 O10 (search for similar items in EconPapers)
Date: 2026-05
New Economics Papers: this item is included in nep-afr, nep-bec, nep-ent, nep-fdg, nep-ifn and nep-sbm
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