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Africa: Continent Now Attracting a String of Investors in Tech Markets
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Venture capitalists from across the world are making a beeline for a slice of the African techie pie, as interest builds up over its potential.
Over the past few weeks, at least three initiatives have been announced to tap into the continent’s tech startups.
This is a dramatic change of fortunes for the startups, which were previously shunned as they were considered too risky a venture, with studies indicating that lack of incubation facilities did not help matters. Not anymore.
Probably buoyed by homegrown technology success stories from Africa, such as M-Pesa, the mobile money transfer service, and Ushahidi, the crisis mapping software that was used to map hotspots in Kenya’s post-election violence, trace survivors of the Haiti earthquake and, more recently, during the Libyan conflict and Japan tsunami; the angel investors are sparing no effort, and are willing to invest more than funds.
Last month, internet search giant Google unveiled an incubator facility that targets technology entrepreneurs based in South Africa.
It not only includes up to $50,000 in seed capital, but also mentorship, business training as well as free space and bandwidth in Cape Town for developing a web or mobile-based technology startup idea into a successful business.
Apart from the Google initiative, other efforts targeting African technology entrepreneurs is the Net Prophet workshop, planned for Cape Town in May and sponsored by Old Mutual.
In West Africa, an Estonian group has lined up two workshops in Lagos and Accra in May to hunt for new tech startups in an initiative dubbed Garage48.
Permjot Valia, a London-based business angel who will be facilitating the Net Prophet workshop, says that like other parts of the world, Africa has huge potential in technology and its contribution to economic growth.
“Look at India. About 20 years ago it was seen as an economic basket case, as was Brazil. They are both now leading the world in growing their economy and particularly in Brazil, showing how economic growth can be the way to lift millions out of poverty. It can be done and Africa will get it done,” Mr Valia says.
According to Ragnar Sass, who is among those behind Garage48, and are also keen on holding similar events in East Africa and South Africa, the next successful startup can come from whatever continent.
“Not every IT startup necessarily needs to be the next Google or Facebook, sometimes it is as valuable if the startup can solve problems of local people and be reasonably profitable,” Mr Sass says.
It is this kind of optimism that is behind the interest in the region that even saw Silicon Valley-based angel investors I/O visit East Africa late last year to scout for talent.
However, this new wave might not be beneficial to the Information and Communication Technology sector only.
The other likely beneficiary in the will undoubtedly be Cape Town.
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