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Why Investors are now Targeting Africa

Investors Africa

In terms of sourcing for tech startups, Africa still trails behind London and Silicon Valley, but that is not the right view. In the Q1 of 2018, the investment in the tech sector moved to $168.6 million bypassing the African 2017 VC funding value of $167.7 million. The findings are according to technology media platform WeeTracker. In case the trend goes on each and every year African tech startups stand a chance to witness the Cambrian Explosion. However, to realize such evolution lessons from the current success must be taken to the next year.

Africa currently has $409.93 million of capital across 15 incubators, funds and accelerators and this shows a clear demand for innovation in the continent. According to Pieter van der Merwe, the managing director of VDMA Attoneys, 1.2 billion African populations represents 15% of the world’s population and more than 50% of the population is under 20 years of age. The African youths are ripe for technological adoption and investors cannot manage to keep away from them. Oussama Fraikech, a partner at the Fraikech Associés said that over a half a billion Africans use mobile devices. It means that there is a rise in the level of technological knowledge and the market demand by consumers which attracts consumers.

Tech startups such as Kenyan based digital platform Cellulant that secured $47.5 Series C funding round and bypassed the $47.23 total collection by African startups in the H1 of 2017 it is a clear indication of investors’ interest into the African startup. This is in exclusion of the African fintech ecosystem that registered 25 deals valued at $95 million making it the highest funded sector in 2018. According to CEO of financial inclusion company Oradian Antonio Separovic, there have been an increased number of fintech startups entering Africa’s markets to meet the high growing demand for mobile money and financial services. He added that the startup community would go on with solving more problems in Africa and promote development.

According to Separovic, apart from fintech, transportation, education, health, and energy sectors are also making significant moves. He added that there is an increasing number of partnerships between startups public organizations and established community organizations within every sector. Irrespective of the success, Africa has constantly been affected by poverty and famine driving away some investors. But the success in tech strives on making positive out of negatives. Separovic said that the increase in startup funding is a reaction to the demand of the market.

There is potential to overcome most critical issues in Africa while the barriers for entering the market are minimized. Tech innovators have a potential of tackling the African challenges. Merwe said that many African countries have problems with distribution of healthcare due to poor infrastructure. This is both in rural areas and underdeveloped cities making it a key sector in need of new technology solutions. The African the sector is on the rise more so in countries such as Egypt, Nigeria, and Kenya that are registering top funding partners.

According to the founder of a malaria test device Matibabu, Brian Gitta, the startup community is on the rise in most parts of Africa, and many markets have continued to attract most of the investment. He added that there is a need to increase the number to help transformative innovation that can easily happen across the continent take off. The rise in funding in Africa is as a result of the availability of a lot of co-working spaces and research institutions which are coming in to mentor and offer relevant skills to the growing population in Africa. The IT sector is revolutionizing the African global linkage and addressing the needs of all emerging markets. The confidence of investors towards African tech and the continued creativity of entrepreneurs will help bring the sci-fi of Wakanda closer to reality.

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Written by Denis Opudo

Am an engineer who's a tech blogger, hit me up on dennis@techinafrica.com and we base our discussion on technology in Africa and the rest of the world.
Denis the Tech guru

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