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Why a wave of technology giants will come from Africa

Why a wave of technology giants will come from Africa

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Ian Lessem, Managing Partner at HAVAÍC, investors in early-stage, high-growth technology businesses, has noted a significant increase in investment demand for African technology start-ups.

He said start-ups on the continent are at a distinct advantage because they compete out of necessity. As a result, they can, and very often do, stand toe to toe with start-ups in the more established tech hubs of Palo Alto, Singapore, London and Tel Aviv. He added: “African innovators face local challenges so pervasive; they simply have no choice but to tackle them head on and become subject matter experts in finding solutions for real-world problems like food security, health, education, safety, financial services and logistics.”

Lessem said that African technology driven solutions borne out of necessity create efficiencies, new products and opportunities, and most importantly solve local challenges that resonate globally. Because of this, they have the inherent ability to leap across national boundaries and sidestep the usual rules of cultural friction. He added: “With the world having quickly adjusted to the realities of the on-going global social and economic crisis as a result of the COVID-19 pandemic, solutions that solve real-world challenges are without a doubt the best opportunities for growth. People and businesses are craving solutions that make their day-to-day lives easier, better and less frictional, and the pace at which they are adopting technology to do this continues to accelerate.”

Not only does HAVAÍC support promising start-ups, it also understands the power of unlocking the potential of venture vapital (VC) as an investment class in Africa. Investing in African start-ups offers the opportunity to invest in real-world businesses solving real-world challenges, and the chance to invest in a sector that offers undeniable growth prospects. “While it seems unlikely that the greatest contributions to and innovations in biotech or space travel will emerge from Africa, African founders are paving the way when it comes to creating commercial and innovative solutions to local challenges that also have global relevance,” said Lessem.

In contrast to tech hubs in developed economies where there is an abundant supply of available capital for start-ups and entrepreneurs, Lessem said scarcity of financial resources in Africa does little to limit the potential, and indeed the success, of start-ups in South Africa, Kenya, Nigeria and Egypt. “The hidden advantage in this scenario is that African entrepreneurs and start-ups self-fund and bootstrap for as long as possible. This translates to founders having a sharp focus on creating commercially successful business from the get-go. And because it’s their time and money at risk they have no choice but to make a success of it. Underpinned by commercially viable business models, African start-ups are tested in uniquely challenging conditions, become experts in their field, and this breeds a unique resilience which gives them an edge as they seek to enter international markets.”

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