While putting together our African Tech Rising podcast series, I had the pleasure of interviewing some of Africa’s most successful entrepreneurs and VC’s of the past few years including Iyin Aboyeji of Andela and Flutterwave, Chris Folayan of Mall4Africa, and Eric Osiakwan of Chanzo Capital. Here are the 5 insights into Africa’s booming digital economy that I took away from the series.
- Series A rounds and beyond will continue to be a huge challenge for most of the African ecosystem outside of South Africa. However, this gap will slowly start to close overtime as VCs and Angels see the opportunity at this stage to take a business model that is successfully being executed in one of the KINGS countries, Kenya, Ivory Coast, Nigeria, Ghana, and South Africa, and scale it to the others.
- Innovation in mobile payments across the African continent is much further along than in the US, Europe, and most of the rest of the developed world. Back in 1995, South Africa lead the African continent with the massive distribution of mobile phones. The common practice of prepaid minutes being offered by the large telecoms created a situation, in which they held large sums of money, putting them in a position to offer money transfer services built on the infrastructure of mobile devices. This cultural trend traveled to Nigeria, then to Kenya where M-Pesa was launched by Safaricom and Vodafone and resulted in widespread use of mobile phone-based money transfer. One of our featured entrepreneurs Elizabeth Rossiello of BitPesa, would had just raised a Series A from Tim Draper and Greycroft, says she never uses cash anymore, every transaction she does is through mobile payments. Another advantage Africa has is the lack of legacy financial infrastructure and regulation that presents enormous challenges for FinTech startups in most developed countries.
- Africa’s population is 70% youth and they’re hungry to succeed in today’s global, digital economy. A large portion of Africa’s youth are using education tools such as Udacity, Codecademy, and even Youtube to learn the skills necessary to become great engineers.
- Problems still exist that are too big for African countries to “entrepreneur their way out of”. Infrastructure and weak public/monetary policy will continue to be a challenge across most of the continent. One example, is how challenging it is to go through the process to register a new business. In Nigeria, in particular, it’s a very expensive process with no standardized templates to do it well.
- The African Fin Tech scene is heating up and the big players in Silicon Valley are starting to notice. Zoona, headquartered in Zambia, raised a $15m Series B in 2016. BitPesa in Nairobi raised a $2m Series A, lead by Tim Draper’s VC fund, this past January. Lagos-based payment processor Interswitch, has been rumored to be heading to an IPO very soon.
After an incredible month of interviews I can confidently say that I will be closely watching the innovation wave sweeping acorss the African continent. Here is one of my favorite episodes of the series featuring Iyin Aboyeji of Andela and Flutterwave, an YC-backed, African startup building an API gateway for payments across the African continent.