A few weeks ago, I claimed the “age of African VC” had arrived. Last year was sound enough, with VC4Africa saying total capital investment in African startups on its platform more than doubled in 2014, and sizeable funding round for the likes of Takealot, Jumia and Konga.
This year started well too, with Tanzania’s Ubongo receiving US$75,000 from learning firm Pearson, GPS navigation and wireless device company Garmin acquiring South Africa’s iKubu, M-KOPA solar securing US$12.45 million funding and Parcelninja US$1.7 million. I also said there would be plenty more to come.
I wasn’t prepared for what May would bring, however. Disrupt Africa has reported on funding rounds for Kiro’o Games and SweepSouth. But three major bits of news really caught the imagination, and should serve to get entrepreneurs’ juices flowing across the continent.
In mid-May, it was announced Kenyan fintech startup Weza Tele had been acquired by financial services group AFB for US$1.7 million, the largest acquisition of a tech startup in the country thus far. South Africa’s WooThemes was also acquited, by Automattic. And earlier this week we reported Nigerian online hotel booking platform Hotels.ng had raised a US$1.2 million funding round from Omidyar Network and EchoVC.
Sam Gichuru, chief executive officer (CEO) of Nailab, told Disrupt Africa in the aftermath of the Weza Tele acquisition the news should encourage three groups of people: “1. the startups, to apply for incubation and be ready to learn, 2. the investors to come via the incubation and work together to vet deals and ensure greater success, 3. to tech writers in Africa, to ensure more inspiring stories like this are on the lips of every young entrepreneur in Africa.”
Quite. Inspiring stories such as these are just what is needed for Africa’s tech startup ecosystem. They send out a message to struggling entrepreneurs across the continent that there is light at the end of the tunnel, that your effort and hard work can be rewarded. It proves that there is funding available to African startups, with the lack of money available one of the major concerns for founders from Cape Town to Cairo. And it should serve to encourage investors as well. Some individuals and companies are confident enough to pump large sums of money into African tech startups. Some even buy African tech startups. You should too.
We all know money is coming to Africa. Mobile operators are getting involved, with Millicom launching its US$10 million Millicom Foundation, Safaricom its US$1 million investment fund, and Orange its early-stage investment programme Orange Digital Ventures. The Tony Elumelu Foundation has launched a US$100 million entrepreneurship programme, while existing VC firms are expanding their reach. Silvertree Capital is planning to make investments in Nairobi this year. New VC funds are springing up everywhere.
The idea that Africa is a risky place to invest still remains, and startups still have reason to be concerned by the lack of funding. But success stories such as those of Weza Tele, WooThemes and Hotels.ng should go a long way to convincing all involved in this ecosystem that there are opportunities to build huge companies. And inspiration is half the battle.