About a year ago, Mark Zuckerberg visited tech companies in Lagos, Nigeria. Zuckerberg and his wife donated $24 million to a tech company called Andela. According to the Africa Business website, Andela trains software developers and has a branch in Lagos and in Nairobi.
Some people believe Zuckerberg’s visit to Lagos and his $24 million investment have helped to validate the ongoing buzz about the Nigerian tech industry. According to a venture capital firm in San Francisco called Partech Ventures, the African Tech startup companies all over the continent raised $276.5 million in 2015 and $366.8 million in 2016. South Africa, Nigeria, and Kenya accounted for 80% of Africa’s total funding. The number of technology hubs in Africa increased from 117 in 2015 to 310 in 2016.The tech industry in South Africa still remains the most advanced on the continent.
The adoption of the mobile internet can be said to be fueling this growth in the tech industry. Many Africans find mobile Internet more convenient and cheaper than broadband for personal use. The growth in the African tech industry is amazing considering the fact that the average seed investment in an African startup is $200,000, compared to over $1million in the US. The recent hardships in the major African economies have caused the investments from African sources to be less than they ought to be. Foreign investors are hesitant because they feel there are not enough larger companies willing to buy out the startups, providing financial support and mentoring to the start-ups.
African start-ups tend to provide solutions to problems on a local level. This has been an effective strategy since is very beneficial to the citizens. Foreign investors, however, feel that the startups need to tackle more global issues. By stacking more global issues they are more likely to be bought by larger cooperations (e.g google) and will stand to make more money for their investors in the long run. Startups in Africa still face the threat of international companies coming in and taking over the market in specific areas.
I believe in people of African heritage all over the world begin to invest in the Tech industry in Africa there will be a more rapid growth in the industry. The investors also stand to make a lot of money in the long run.
Please note that this is a 3 part series and the second article will be posted next week, Thank you. Leave a comment!!