TechInAfrica – The Rand Merchant Bank’s Bureau for Economic Research Business tells us that confidence in South Africa is at a five-year low. And yet many analysts look for—and occasionally find—silver linings in the clouds. Yes, there’s plenty of bad economic news to go around. But innovation scenes such as those in Johannesburg and Cape Town help investors stay optimistic.
Why is that?
While some investors worried about the state of the government and the quality of its leadership, others take the longer view. These investors live with the expectation that Africa’s growing middle class will become a strong consumer market.
But Brett Commaille, lead partner at AngelHub Ventures, lets the cat out of the bag, noting, “There’s a clear preference [among investors] for businesses that demonstrate their ability to sell in foreign markets and grow despite the tough economic conditions.”
VCs Respond to a Great Year by Funding with an Open Hand
2015 was a stellar year for African startup funding. You’ve probably already read the news that African startups garnered R 3billion (USD 185 million) last year. If plans mean anything, 2016 will be another good year. Silvertree Capital, plans to pump USD10 million into African economies.
The usual Big Three countries—South Africa, Nigeria and Kenya—are the main targets. Worry about the SA economy was probably leavened a bit by Silvertree Internet Holdings (Silvertree Capital’s parent) announcing 330 percent year-on-year growth for 2015, bringing in $10 million in revenue.
In January, Knife Capital another South African venture capital firm, posted revenue of R 65 million (USD 3.9 million) from its second Grindstone accelerator program. In a year, Grindstone took 12 businesses under its wing and recorded 64-percent growth year-on-year.
Ory Okolloh, director of investments at Omidyar Network, chalks it up to a maturing ecosystem. He notes that more startups are focusing on B2B operations and achieve positive revenues earlier on than previously.
Bottom Indications are that the number of funding vehicles available to new and existing entrepreneurs will grow in 2016, not shrink.
This interesting article has a lot to say about what happens after the funding hits the bank. But it also reveals what funders look for in the first place.
Innotribe opens applications for Startup Challenge
If your dream is to compete in the Innotribe Startup Challenge for Africa, now’s the time to sign up.
The challenge is part of SWIFT’s African Regional Conference held in Mauritius from 17 to 19 May. Young African fintech startup owners can showcase their products and receive expert coaching and mentoring from the best that Africa has to offer.
Twelve companies will compete in the event, and three finalists will attend Sibos, the annual SWIFT global financial services conference. Apply before the mid-March 2016 deadline. Successful applicants will be announced in April 2016.