African startup CEOs that study abroad raise more VC money than those at home

Besides being the chief executives of multibillion-dollar African startups, Olugbenga Agboola of Flutterwave, and Ham Serunjogi of Chipper Cash have one other thing in common: credentials from US universities. A lot of African tech leaders that raise venture capital funding are like them.

In 2021, 73% of the over $4 billion raised by African startups was by CEOs whose latest degree was a Masters or MBA obtained from a university outside of Africa, according to analysis by Africa: The Big Deal, a substack newsletter that covers startup deals in Africa. The analysis relied on educational history as displayed on the CEOs’ LinkedIn profiles.

The exceptions were Egypt and South Africa. Otherwise, Nigeria, Kenya and the rest of the continent helped form the larger trend.

Do homegrown CEOs have it harder?

The numbers for Kenya will not surprise followers of that startup scene.

At least once last year, a startup came under scrutiny after its expat founder’s questionable comments smacked of white privilege and a white savior mentality. It rekindled previous conversations about how it is easier for white founders to raise money for African startups from Silicon Valley investors, relegating local (and particularly black) entrepreneurs to the background.

But looking at where VC-backed founders schooled suggests that investor bias and inclination to stick to familiar patterns may not be down to color alone. Most Nigerian startups are founded by black Nigerians, yet the data above suggest that startup fundraising is overwhelmingly a sport for those whose latest degree is foreign. The Big Deal’s authors say “both in terms of number of deals and amount raised, it is US-educated CEOs who lead the charge, followed by their UK-educated peers.”

Their analysis doesn’t go into why this happens. Seeing the total pool of investment pitches received by investors from founders who studied locally and abroad in each country would give a clear sense of whether there is active investor bias for foreign-schooled CEOs.

Last year’s African mega rounds were overwhelmingly led by foreign investors like Softbank, Tiger Global, and the International Finance Corporation. Studying in and understanding the cultural dynamics of where most funding comes, it could be argued, gives such CEOs an edge.

The usefulness of judging founders by academic qualification is arguable. If deemed useful, South Africa’s and Egypt’s outlier data may be an argument that education quality in most African countries, not investor bias, is the problem here. The University of Cape Town, which had 34 alumni CEOs raise VC funding last year, per The Big Deal, is Africa’s sole representative in the top 200 of the US News and World Report’s best global universities.

Some reactions to the data have struck a realistic tone. “These things take time,” said Lumi Mustapha, the head of legal at South Africa-based startup incubator Founders Factory Africa.

His expectation is that the currently favored set of foreign-schooled founders, as they become successful, will fund the best of their counterparts who schooled at home  “across the spectrum of gender, religion, ethnicity, socioeconomic background.”

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