The Afrobytes and Viva Tech conferences in Paris this week have provided an opportunity to look at the progress that high-tech startups have made in Africa, where fundraising is booming.
According to Partech Africa, a venture capital firm, 146 startups in 19 African countries raised $1.16 billion for African digital entrepreneurs in 2018. Kenya, Nigeria and South Africa received 78% of the total funding, with Egypt close behind.
In French-speaking Africa, Senegal is the leading hub with $22 million raised in four deals. Compared with their Anglophone peers, Africa’s Francophone countries operate in smaller markets, and lack capital and mentors.
A key: Seeking advice
Marieme Diop, a venture capital investor at Orange Digital Ventures, said that “unfortunately in Francophone Africa, it is not in our DNA. People who succeed in business or in electing positions do not necessarily reach back to help their peers to show them how to be successful. In the Anglophone world, it is a must for anyone who wants to start something: seeking advice. So the gap is not only financial” between the regions.
Africa is seen by many as the next frontier for venture capital, with its booming population and mobile-first economy. That’s why Google, Facebook and PayPal participated in Paris in Afrobytes 2019.
“We do not want people globally to see African high-tech as an exotic stuff,” said Afrobytes CEO Ammin Youssouf. “We want to be heard and talk about AI, blockchain, what is happening in Silicon Valley, because it has an impact on us. We already have brilliant minds in Africa, especially in tech, to have those conversations.”
Unlike the global trend, where men dominate the high-tech industry, women are leading the movement in Africa.
“Actually, what we see in the statistics is that women’s involvement and participation on in the African continent is much higher than what you would find in New York, for example, or San Francisco,” said Ben White, chief executive officer of venture capital platform VC4Africa, who has been supporting startups on the continent for more than 10 years. “I think it is an advantage. It also means having women investors who are very sensitive to gender-related questions and can also ensure that the system we are building is inclusive.”
Governments in Africa are trying to regulate the activity and even support the sector. Forty Senegalese startups last November secured a total of $2 million in government funding. But some experts say governments lack the skills needed to pick good investments.
Kenza Lahlou, co-founder and managing partner at Outlierz Ventures, said the public sector “should not invest [in startups]. States should build funds of funds. We have that in Morocco in partnership with the World Bank. The government started Innov Invest, to invest in local venture capitalist funds, to lower the risk for local funds.”
With a population expected to reach 1.4 billion people by 2021, and a continent that will put about 1 billion smartphones into use within two years, Africa is a promising area for the world’s leading high-tech and telecom companies.