The high levels of innovation and increasing ease of launching a tech startup mean there has never been a better time to be an entrepreneur in Africa, but more capital is necessary to help startups on the continent succeed.
That is according to panellists at the annual AfricArena event in Cape Town earlier this week, who agreed there was a huge amount of innovation on the continent that needed supporting.
“We believe that Africa is now,” said Clive Butkow, chief executive officer (CEO) of Kalon Venture Partners, who said the reasons for this were talent and the lower cost of starting a business and accessing customers.
“We’ve got the talent. The human capital is there, a lot of talent is coming back to the continent,” he said.
Meanwhile, Africa’s young population, the prevalence of US$20 cell phones, and the presence of services such as AWS on the continent, means barriers to entry are lower.
“Financing a business now as opposed to in 2000 is about 1,000 times cheaper,” Butkow said.
African entrepreneurs are also used to operating lean, due to the lack of investment opportunities.
“They don’t have capital, so they spend what they do have wisely,” he said.
Aaron Fu, who is in charge of growth at the Catalyst Fund, agreed with Butkow that the specific conditions faced by African entrepreneurs meant they had to operate at a very high level.
“African entrepreneurs tend to be a lot more driven, a lot more hardy. And the innovations we need to build here you wouldn’t get to build in other markets,” he said.
All were agreed the levels of innovation are high.
“There are a lot of specific local challenges that are massively scalable but don’t look attractive to the European or US way of doing it,” said Sascha Breuss, CEO of Jumia.co.za.
“We have to be innovation-led in Africa because there are so many problems and there are 1.2 billion people,” Butkow added.
Accessing talent is a major issue for African entrepreneurs, and though the talent is there, finding it at the right time can be a challenge.
“Every entrepreneur thinks they have to be the best at everything. You just have to be the best that you can be, use your strengths, and find people that can complement your weaknesses,” Butkow said.
Fu said finding the perfect talent at the right time was difficult.
“Sometimes what you are trying to build is so niche that it is hard to find the right person,” he said.