Nairobi was the stage for the Africa VC Summit 2023, organized by Kauffman Fellows, and our Chief Ecosystem Officer, Liz Fleming, had the opportunity to participate in a panel with CRE Venture Capital on «Building Thriving Ecosystems». We spoke with Robel Chiappini, Principal at CRE Venture Capital, who told us more about the African ecosystem and how the topic of investment and startups in that region is progressing.
«The views and opinions expressed herein are those of the author and the author alone and do not reflect the views or positions of CRE Venture Capital or any other entity the author may represent.»
What is the state of Africa venture today?
The last decade in Africa venture was focused on laying the structural foundation that has enabled a less restrictive flow of information, value, and opportunity. Coming into the 2010s just 2 out of 100 households in the region had access to the internet; today, 2 out of 5 enjoy mobile connectivity. There are a half-dozen private tech companies in the region today valued at $1bn+. 80%+ are fintech’s and only one was founded prior to the iPhone 6. In 2023, the opportunity to express (and recognize) brilliance has never been less restrained by your GPS coordinates or life circumstance.
The next decade for Africa venture will be about building products and services that sprout from that foundation to better serve African users, businesses, partners, and economies. Commerce, financial services, and international trade will continue to attract investment as young upstarts with better aligned products out maneuver established incumbents. New bellwethers will form in large markets – some hiding in plain sight – adopting tech for the first time.
What challenges do African founders face?
Leading a venture-backed company in any developing market is hard. While the opportunity is immense, the environment culturally is often less forgiving of risk taking. Steadfast ambitions can come across as peculiar or misguided to the untrained ear. The result is that our founders tend to be more creative in defining community and reach further to build support networks from which expertise, talent, and capital can flow.
What are the funding gaps and opportunities for international investors in this region?
The ecosystem has grown meaningfully, attracting $3.5bn+ in equity investment on average over the past 3 years. Today, there are several early stage investors focused on the region with a grounded intuition for what it takes to be a successful venture backed company in Africa.
Where we continue to see mispricing’s are in the growth market for battle tested entrepreneurs with sound business models building structurally important companies. Over a 10-year time horizon, tech will infiltrate a greater share of African economies. And challengers today will further embed themselves into the commercial fabric of the markets they serve. As investors, we’re drawn to these asymmetries and work tirelessly to unlock these opportunities for our founders and partners.
How can a platform like South Summit help your ecosystem by promoting the connection between the South American and African markets?
The parallels between the two regions are hard to ignore. Both are made up of young economies that are developing rapidly with youthful populations approaching their most productive years. These markets will evolve in harmonized ways as tech uncovers new means to solve old problems more effectively. Many Africa teams draw inspiration from their South American counterparts further down the path. And many South American companies are finding that their own learnings are highly applicable to largely untapped African markets.
As one steward of the South American ecosystem, South Summit is well positioned to help demystify the African tech opportunity for South American companies. Encourage companies to consider Africa expansion, I think they’ll be pleasantly surprised with how familiar these markets can be.
Tell us a success story of one of these «tech companies that are levered to Africa» and in which you invest?
Some of the companies focused on the region that we’ve been lucky to partner with and learn from include: Andela, Carry1st, Flextock, Flutterwave, Sabi, SmileID, Stitch, and Yoco.