Topic: Startups in Africa
Speaker: Emanuele Colonnelli, Professor of Finance and Entrepreneurship, The University of Chicago Booth School of Business
Time: 10:00am-11:30am, October 30
Location: 4-101
Abstract:
We document a drastic increase in the flow of high-growth (venture) capital to “startups” in Africa over the past decade. We build a new data infrastructure to characterize the features of this new and growing entrepreneurial ecosystem. Startups are digital, have highly educated founders, and cluster around high-density high-human capital hubs. While several of these facts are common to other emerging markets, one feature stands out as unique to Africa: the role of foreign influence. We show that the bulk of investment flows to white entrepreneurs who studied or worked outside of Africa, primarily comes from foreign investors from rich countries, and displays homophily patterns based on common language and past colonial linkages. To disentangle between a demand and supply channel of foreign influence, we conduct a real-stakes, large-scale field experiment in collaboration with the International Finance Corporation to identify the preferences of Africa’s high-potential startups using incentive-compatible surveys. Entrepreneurs do not care about the source of capital (foreign or not) and place nearly zero value on forms of non-financial support. Instead, they display a strong preference for equity investments coming from investors with local experience, but do not want to give up control of the firm. Our findings point to a “missing” local equity financing market for startups in Africa leading to a dominance of foreign investors’ influence on Africa’s entrepreneurial ecosystem.
Speaker Biography:
Emanuele Colonnelli is the Professor of Finance and Entrepreneurship at The University of Chicago Booth School of Business. He is a Faculty Research Fellow at the NBER, and a Research Affiliate at CEPR, BREAD, and J-PAL. He also leads the Finance and Entrepreneurship Theme at PEDL. He is the recipient of a number of grants and awards, such as the 2023 Carlo Alberto Medal, a biennial prize given to the best Italian economist under 40.
Colonnelli’s research focuses on the intersection between finance, development, and political economy, with a special interest in the interactions between governments, firms, entrepreneurs, and investors. Specific interests include a range of topics such as venture capital and private equity in emerging markets, corporate governance, corruption, ESG and impact investing, public procurement, and corporate bankruptcy. He has research and work experience in several emerging economies, including Bangladesh, Brazil, China, Ethiopia, Ghana, India, Indonesia, Kenya, Malawi, Mexico, Myanmar, Nigeria, Rwanda, South Africa, Uganda, and Vietnam and regularly conducts world-wide surveys and field experiments with entrepreneurs, firms, and investors. His research has been published in various top academic journals, such as the American Economic Review, the Journal of Political Economy, the Review of Economic Studies, the Journal of Finance, and the Journal of Financial Economics. At Booth, he developed and teaches the first MBA class focused on venture capital and private equity in emerging markets.
Colonnelli joined Booth in 2018 as an Assistant Professor of Finance, and from 2022 he was Associate Professor of Finance and MV Advisors Faculty Fellow. He was also a Visiting Associate Professor of Business Administration in the Entrepreneurial Management Unit at Harvard Business School, where he taught the MBA elective on Entrepreneurial Finance.
Colonnelli holds a PhD in Economics from Stanford University, an MSc in Economics from Bocconi University, a BSc in Economics from the University of Siena, and he spent an academic year visiting Pembroke College, Oxford University.
