Africa is one of the fastest-growing markets in the world. This is not surprising considering analysts’ submission that approximately 85% of the global population growth will take place on the African continent over the next 80 years.
Going by this estimation, an urgent need for drastic socio-economic intervention across Africa to anticipate and accommodate the impending population growth is necessary.
It also highlights the opportunity open to astute venture capitalists who aren’t just idly curious about technology and innovation but are ready to take advantage of its potentials as concerns the incredible economic rewards it offers.
Before the global outbreak of COVID-19, was a steady growth of investors who fit this category within and outside Africa.
A particular report shows that in 2019, $2,02 billion in venture capital (VC) funding went into 250 deals across Africa, involving 234 tech or digital startups across the continent.
Following the increase in the number of VC funding of numerous startups since 2018 upwards, the appeal of Africa’s tech startups as choice investment becomes apparent.
It would be expected that the global pandemic would severely diminish the attraction Africa’s startups pose to investors. Instead, it has continued to grow in the face of prevailing economic challenges.
For instance, Between January and August 2020, African tech startups raised over $600-million in VC funding, which succeeded expectations due to an eight percent increase on the same period in 2019.
Since the past few years, this increasing interest in early-stage African tech startups come, not only from international investors but African-based as well.
This contributes to the sustainability of the venture capital sector in Africa.
Increase in startups funding in a post-covid world- How possible?
Despite the resilience of the VC sector in Africa during 2020, the residual negative impact of COVID-19 is still felt in the global economy.
In addition, the possibility that risk aversion in other investors might influence VC in Africa is worth considering. How then can VC in Africa maintain its progressive pace against the odds?
First of all, it is good to remind ourselves how far we have come.
This will ensure that we focus on promoting tech, in all its various forms. This by presenting as a compelling career path to young Africans.
Now more than ever, Africa needs a host of talented, tech-oriented entrepreneurs.
To achieve this, there requires a level of commitment from the educational sectors in providing top-notch tech education for all, especially the young.
From the perspective of funding, there is a need for attention towards the growing risk capital available to fund startups across Africa.
This is achievable through creating awareness of the values that such startups offer to individuals with high net-worth, organisations, and venture capitalists.
True, investing comes with risks; however, taking these more than average risks is possible only when investors are provided with proofs of governmental support.
Supports could be in the provision of research grants, incentives, subsidies, and the like. All these go a long way to assure prospective investors that their cause is a worthy one.
The way forward
It can be argued that vital components necessary to the growth and sustainability of the Africa tech startup sector are partnership and acquisition.
Through partnerships, innovative startups can access resources and opportunities which they wouldn’t have gotten otherwise. Through acquisition, cutting-edge startups can be acquired by established corporations also.
In promoting the culture of startups in Africa as disruptive and innovative, accelerator programs, incubators, and solid entrepreneurial support hubs have major contributions to make.
Commendably, all the above mentioned are active within the African tech space in creating opportunities where startups are connected with corporates; investors fund startups at different stages and mentorship programs are extended to owners of startups.
Good prognosis for the future
Conversations about the changes COVID-19 has wrought in the global economy has been over-flogged; however, all is not doom and gloom.
The possibility that the post-COVID-19 environment will likely be even more conducive to the success of tech startups is not far-fetched.
The world, particularly Africa, will be hugely reliant on digital innovation and disruption than ever before. To accommodate this future possibility, what is neccessay is a vibrant, strong, unbeatable tech startup sector.
If given proper backing by visionary venture capitalists, Africa will undoubtedly rise on addressing future digital demands.
Featured Image: financialtechnologyafrica
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