Kingmakers – The global capture of Africa’s high-impact start-ups
KIZITO OKECHUKWU | JULY 24, 2018
Modern globalization makes it difficult for anyone innovative to succeed without collaborating and cooperating with various ecosystem stakeholders. Capital resource is now the new weapon for kingmakers in the booming and lucrative technology space. European, American and Asian counterparts have grasped this quickly and have amassed vast capital resources, which makes the playing field uneven and gives them a great leading edge to invest in and scale new opportunities.
As we know, today’s world operates without boundaries and technology is a key culprit in making it even more challenging to keep the borders closed. Gone are the days when inventions or innovations are kept for consumption by a local community or country.
Now, it takes just a mouse click for these to go global, because any innovation, anywhere presents lucrative opportunities, which in turn instantly attract institutions, investors and countries – primed and ready to jump right in to ensure that they play a role in bringing it to market or to ensure that their organisation does not get swept aside by the wave length of the innovation or invention.
Africa is still on the back foot of these funded developments and most funders on the continent do not have the foresight to identify and act on opportunities quicker than their counterparts in America or Europe. It is a fact that most big deals that were struck were led by investors from Asia, America or Europe. US-based Insight Venture Partners has raised $6.3 billion for its latest technology fund. Softbank, a Japanese firm, has also amassed a $100 billion-plus vision fund for tech companies. The Softbank fund is also seeking to invest over $1 billion on a China AI start- up firm – Sense Time Group.
The world is also fast realising that African start-ups are a pivotal part of the economic future. A recent report published by Africa Tech start-ups funding report claims that in 2017, African start-ups raised over US$159 million with Nigeria, South Africa and Kenya leading the pack. I believe this figure is an underestimation, given that most deals conducted by investors and start-ups on the continent are not recorded.
It is widely believed that the actual recorded deals for this year alone are worth over US$170 million. With these deals in mind, a new report suggests that many Silicon Valley investors are now eyeing Africa as the next tech frontier. Recently, the Nigerian Vice President Yemi Osibanjo visited Silicon Valley to meet with various US tech investors, for what he is hoping will bring a tech revolution and investment into the country. Google also announced that it will open its first AI lab on the continent in Ghana.
I wrote an article a little while back on start-up visas, highlighting just how many countries in Europe, America and Asia are offering them to African start-ups to reside and work in their countries. On top of that, they dangle lucrative incentives, as much as €40 000-50 000 each. There is also a noticeable upsurge in international institutions launching various entrepreneurship and start-up programmes to lure young trailblazers and high impact start-ups to join them. I highlighted this on my previous piece titled, “Africans on the outside”.
Yes, this current entrepreneurial environment is exciting and does present an array of opportunities, but it can also pose a threat to the economic solidarity of the continent. I’ve highlighted a few threats and how various African governments and institutions can curb these:
- Data Threat: As these innovations develop, Africans were exposed to abuse where there are no checks and balances on the protection of information. For example, post the exposure of Facebook’s data threat, America and the European Union summoned the Facebook CEO to account for this. In Africa, this was ignored because I assume that there is no system to even establish whether there was exposure to us or not.
- Invention Threat: Many young high-impact start-ups that are offered an overseas programme either receive positive engagement with viable, mutually beneficial partnerships or their innovation gets taken by these organizations, investors or NGOs.
- Solidify our System: The African Union, African Development Bank, various African governments and DFIs, from South Africa to Nigeria to Kenya and Egypt, should solidify their systems and work on creating environments that are conducive for start-ups to thrive, which includes mentoring and funding. Without these funds, African start-ups are prone to quickly enlist with investors. Speaking at the annual Mandela lecture in Eastern Cape, Professor Lumumba mentioned the economic colonization of African countries, for example, although a country produces cocoa, it does not produce chocolate, or it mines gold but does not manufacture jewelry. I believe the next colonization could be in the form of African start-ups selling their initiatives and registering their IP in other countries and we’ll end up procuring or using these same services/products from these countries. This is a new form of colonization, but who are we to blame these benevolent countries or organizations? I believe our role should be ensuring that, from the get-go, our local systems are built to fully support each and every start-up and not to whine about the possible ‘theft’ of our idea. Also of critical importance, is to ensure that various developmental institutions have the right people in the right place to accelerate and diligently manage and distribute funding to eligible start-ups.
At the recent annual Mandela lecture, President Obama mentioned how young people should continue to rise and become more ambitious. He added that many young start-ups are doing great things on the continent. What they need is more and more support to continue to thrive. He also spoke to young African leaders to drive change at home, rather than emigrating and encouraged African government to support its people. He said, “More and more not only are we seeing concentrations of wealth, we are seeing concentrations of talent in various global centres, whether it is Shanghai or Dubai……If we have African leaders, governments and institutions which are creating a platform for success and opportunity, then you will increasingly get more talent wanting to stay”.
Recently, many Africans celebrated France’s World Cup soccer victory as an African victory. A French journalist’s response was “if we gave the same team to an African country it would not even pass the first phase, the money for preparations would be diverted, the delegation filled with mistresses and parents for tourism, psychological preparers replaced by pastors, cooks and masseurs without experience, the doctor chosen by affinity with the politicians….”
African start-ups are the beacon of hope and globally, various institutions, investors and countries are now both acknowledging and appreciating this. It is now up to all our African governments and institutions to stand by them every step of the way, or else the neo-colonisation of ideas will make us retreat significantly to where we only consume and do not produce. We hope that one day African start-ups and investors will be kingmakers.
Kizito Okechukwu is the co-Chair of GEN Africa, 22 on Sloane which is Africa’s largest startup campus.