Angel Investors & The “Village People” Syndrome: Why Local Money Stays Hidden (Or Goes Abroad)

The African tech ecosystem is a hotbed of innovation. From fintech to agritech, entrepreneurs across the continent are building incredible solutions to local problems. Yet, a persistent and often unspoken challenge hinders their growth: the scarcity of local angel investment.

While international venture capital has a growing presence, the real engine of early-stage growth should be a robust network of local angel investors—high-net-worth individuals who understand the market’s nuances and are willing to take risks on nascent startups. But for many African founders, this “local money” remains elusive, often staying on the sidelines or seeking opportunities in more established foreign markets.

I call this the “Village People” syndrome.

What is the “Village People” Syndrome?

In many African cultures, there’s a belief in “village people”—subtle, unseen forces that conspire to pull you down when you start to succeed. It’s a powerful metaphor for the social and psychological barriers that can prevent wealth from being deployed for the collective good. In the context of angel investing, this manifests in several ways:

• Risk Aversion: Many potential angel investors in Africa have built their wealth through traditional, less-risky ventures like real estate, commodities, or established businesses. The idea of investing in a high-risk, high-reward startup with an unproven business model and a long road to profitability is often viewed with skepticism, even disdain. The fear of losing a significant portion of their wealth to a “fanciful” tech idea is a major deterrent.
• The “Crabs in a Bucket” Mentality: When a successful individual is seen investing in a young entrepreneur, it can sometimes be met with suspicion or even social pressure. Rather than being celebrated for supporting the next generation, they may be criticized for risking their hard-earned money. The fear of being the subject of gossip or negative attention can keep potential angels from publicly engaging with the startup scene.
• Lack of Trust and Formalization: The startup world operates on principles of due diligence, legal agreements, and structured deal flow. Many potential local investors, however, are more accustomed to relationship-based business deals built on personal trust and handshake agreements. The formal processes of cap tables, valuation, and legal contracts can be foreign and intimidating, making them hesitant to engage.
• A Brain Drain of Capital: For those who are willing to invest, the most attractive opportunities may seem to be abroad. With well-established markets, clearer regulations, and more predictable exit paths, many high-net-worth Africans choose to park their money in foreign stocks, real estate, or venture funds, rather than backing a local founder.

Breaking the Cycle

This isn’t just a cultural issue; it’s a systemic one. To unlock the full potential of local capital, we need to address these underlying problems.

• Educate and Demystify: We need to create more platforms and resources that educate potential investors on the mechanics of angel investing. This includes explaining deal structures like SAFE notes, convertible debt, and equity, as well as the long-term potential for returns. Organizations like the Lagos Angel Network and others across the continent are doing this vital work, but more is needed.
• Build Formal Networks: Angel networks and syndicates are a powerful antidote to the “village people” syndrome. By pooling resources, investors can diversify risk, share due diligence, and benefit from collective expertise. These formal structures provide a shield against individual scrutiny and create a professional, trustworthy environment for investment.
• Showcase Success Stories: We must actively highlight the triumphs of local angel investors. Celebrating the early backers of successful African startups not only provides social proof but also inspires a new generation of investors. It shifts the narrative from “risk” to “visionary investment.”
• Policy and Regulation: Governments and regulatory bodies have a role to play in creating an environment that is conducive to angel investing. This includes clear legal frameworks for company registration, investor protection, and even tax incentives for those who invest in early-stage local businesses.

The “Village People” syndrome is a real and formidable force, but it is not insurmountable. By building trust, formalizing processes, and celebrating our successes, we can empower local money to stay home and fuel the next wave of African innovation. The future of the African tech ecosystem depends on it.

Ayo Emakhiomhe