Business
How African tech startups are powering the continent’s rapidly growing economies
Few tech entrepreneurs in Africa have a long track record to attract investors, said Caio – though the number is rising. Crucially, there are hardly any examples of investors successfully exiting via an IPO or a sale, partly due to underdeveloped capital markets across the region.
One exception is Fundamo, a mobile financial services provider in Cape Town bought by Visa in 2011 for US$110 million.
Kenya, Ghana and Nigeria have companies that could be ready for investment, Caio said: “It’s earlier stage. It’s smaller stuff, which means riskier, which means even less capital for these guys and even more of a gamble.”
“Experts” say it is too soon to tell if African tech will rival other emerging markets but a concerted effort is being made to build an infrastructure to facilitate expansion.
Kenya’s iHub started in 2010 with backing from Hivos, Google and Omidyar Network as a meeting place for entrepreneurs and investors. It has spawned around 50 companies.
Another East African example is the Savannah Fund which offers US$25,000-US$500,000 to startups in exchange for equity.
In Ghana, the Meltwater Entrepreneurial School of Technology gives students one year of training by professionals from around the world who volunteer to teach software development and entrepreneurship. The best graduates get an extra year at a tech incubator in a house linked to the main campus by a rope bridge.
