tech coding

3 of the Most Promising Cities for Tech Startups in Africa

In various African nations, a number of demographic and economic shifts have occurred in recent years, resulting in a burgeoning business landscape. Startups have and will continue to play a prominent role in this process, according to market analysts.

VC4Africa published a report showing that the majority of startups have had success in generating revenue, and another large percentage have secured external investments in their products and services. More specifically, those businesses that have gained the most ground are in the technology field.

The young population in Africa—almost three-quarters of which are younger than 30—has influenced this trend, at least in part. Entrepreneurs have demonstrated an increasing ability to identify and fill gaps in the market based on consumer demand. Business owners in South Africa, Nigeria, and Kenya raised a combined $150 million in investment funding in 2015 alone.

Entrepreneurs in South Africa led the way in securing $54 million in investments by building investor confidence. Nigeria and Kenya, which raised $49 million and $47 million, respectively, stand out for their advancements as leading nations for technology. In fact, South Africa, Nigeria, and Kenya have been compared to some of the most thriving markets in the world. Following is an overview of each city.

  1. Cape Town, South Africa – The Silicon Cape

16452250048_9d04c02d74_b
Image courtesy David Stanley | Flickr

Securing venture capital support and angel funding has proven difficult for many nations on the African continent. Thus, the track record for obtaining funding is one of the greatest strengths of entrepreneurs and startup owners in Cape Town. Local business executives point out that funding numbers could increase even further with the introduction of strategic tax breaks.

Alongside the funding prowess of startups in South Africa, the availability of resources—particularly with regard to IT infrastructure—has greatly contributed to the high standing of Cape Town. In 2011, the city boosted its bandwidth by roughly 1,000 times. Combined with other cost-saving innovations, this move encouraged exponential business growth in the area.

The local university system also attracts its share of investors to the area. For example, Samsung backs a tech laboratory at the University of Cape Town, where staff, students, and researchers develop mobile applications. Another example is Naspers funding a full-scale media service development lab at Stellenbosch University.

Finally, one of the biggest elements in the success of Cape Town, and the push for referring to it as the “Silicon Cape,” stems from community support. Local nonprofits, such as the Silicon Cape Initiative, have formed to promote the economic growth of the city by developing an international business network and attracting new talent to the region.

  1. Lagos, Nigeria – The Silicon Lagoon

Lagos, which is situated right on the coast of the Gulf of Guinea, is a large urban city that has grown significantly in the last few decades. Estimates place the population at somewhere around 21 million, up from 1.4 million in 1970. Some believe that Lagos is contending with Cairo for the honor of the most populous city in Africa.

4184194287_c8689caca4_b
Image courtesy satanold | Flickr

The size of Lagos and the opportunity that it represents for scaling a business model is one of the most appealing factors for entrepreneurs in Nigeria and internationally. In addition, the size of Lagos’ GDP—which is larger than the entire economy of Ghana—has attracted some of the best minds in business.

Close proximity to two local universities has also generated interest in launching new business ventures in Lagos. Yaba College of Technology, the University of Lagos, and The Federal Science and Technical College each produce a lot of talent, and the local environment encourages many of these individuals to remain and start their careers.

Within the growing business scene, the Yaba district has evolved into what some have referred to as “Yabacon Valley,” and Lagos has more broadly received the title “Silicon Lagoon.” Such comparisons with Silicon Valley have drawn a lot of attention from venture capitalists to the Nigerian coast.

  1. Nairobi, Kenya – The Silicon Savannah

50856939_808a9b4239_o
Image courtesy Ruth Hartnup | Flickr

Much of the tech development that has surfaced in Africa over the course of the last 10 years has come out of Kenya. The introduction of mobile money and a model for tech incubation, coupled with global crowdsourcing and government support, have strengthened the industry in Kenya. A growing population and consistently improving GDP have also been contributing factors.

Information and communication technology (ICT) is projected to constitute as much as 8 percent of Kenya’s GDP by 2017. Within that economy, Nairobi, the nation’s capital, is a leading player, attracting startups and international tech giants (such as Google, Microsoft, and IBM) alike.

Part of what is driving this exploding market is the prospect of improving the nation’s economy. Some entrepreneurs are currently focused on developing technology that is capable of reducing cyber security concerns, while others hope to develop a new mobile voting platform to help with future elections. In addition, the highly anticipated 5G technology is expected to revolutionize communication and business in Kenya and throughout Africa.

Advertisements
startup work

A Look at 5 of South Africa’s Most Innovative Startups

But in the midst of all the economic dreariness and bad news, the local startup scenes of Johannesburg and Cape Town in particular have kept ticking along and might even play a role in reinvigorating investor confidence in Africa’s most advanced economy.

Quartz Africa

Africa is home to some of the most innovative tech startups in the world. Perhaps there is no place more indicative of the continent’s burgeoning tech industry than the nation of South Africa.

South African startups have made considerable contributions to various economic sectors, but perhaps no more so than in the areas of science and technology. Several scientific and technological innovations heralded around the world have originated from Africa’s most southern nation.

The impact that startups have had in South Africa cannot be overestimated. The country recently experienced economic stagnation, with many experts stating the country was in a recession in the early months of 2016. However, the economy has lately rebounded, with many emphasizing the important impact of startups in the turnaround.

This post focuses on five of the most innovative startups in South Africa. These young companies have the potential to make considerable noise in their respective markets, and may eventually become industry leaders.

  1. HealthQ

HealthQ LogoTechCentral said recently of a trip to HealthQ: “You could be forgiven for thinking you’ve wandered onto the set of Star Trek when you visit the offices of HealthQ.” Others have touted the company as a South African manifestation of Silicon Valley. Indeed, innovation seems to be programmed into HealthQ’s DNA.

HealthQ has focused its business model around designing and engineering proprietary fitness software technology. Utilizing biomathematics and high-tech sensors, the company markets its platform to other firms intending to bring fitness products onto the market.

According to the company’s website, the aim of their designing processes is “to give people deep insights into their health and fitness…then use these insights to make better choices about lifestyle, diet, exercise, and even medication.”

  1. GUSTpay

Gust LogoGUSTpay is a mobile payments solution company with a twist. With apps available in both the Apple and Android stores, GUSTpay offers a digital event ticketing solution that’s integrated with near field communication (NFC)-enabled wristbands for “Shorter queues…(and) fast and efficient entry.” Partnering with a number of merchants throughout South Africa, GUSTpay also enables users to purchase products or services from their virtual accounts, rather than having to use cash.

Understanding the vital nature of social media, GUSTpay allows its users (with merchant approval) to check-in and interact with their online networks. Merchants who wish to integrate events with social media can also enable Wi-Fi access for their customers via their NFC wristbands.

  1. Domestly

Domestly logoDomestly is an actual online marketplace where people can request the services of local cleaning professionals on-demand. It’s a bit like Uber, but for home cleaning services. The platform also allows cleaners to capitalize on their good name via a ranking system, which they can leverage to set their own rates.

Individuals can order cleaning services via the website or the Domestly app, available via Apple’s App Store and Google Play. Clients have ability to choose a half-day (4 hours) or full day (8 hours) cleaning session. To date, over 500 “trusted and peer reviewed cleaners” are registered on the site.

  1. WhereIsMyTransport

where is my transport logoWIMT has developed its business model around optimizing public transportation systems through the power of data. To accomplish this, WIMT has developed a “single data platform for the public transport ecosystem.” The data is collected from transit operators and fed into a single, central platform. Operators can distribute the information and update it in real time for end-users of transit systems, and over time, cities and transit operators can use the data to assess the effectiveness of systems and plan improvements.

  1. Tuluntulu

tuluntulu logoThis once-small mobile streaming service has since been heralded by numerous tech outlets as the most innovative startup company in Africa. As an app available on both Google Play and Apple’s App Store, Tuluntulu gives its customers the convenience of accessing their favorite television channels 24/7, with “no buffering or waiting.” The app works even on mobile devices with low-bandwidth connections.

Recently, Tuluntulu eclipsed the previous record for the most downloads on a Video-on-Demand (VOD) platform. The app recently exceeded over 500,000 downloads.

The company’s widespread and ever-expanding user base is attributed to a couple of key factors. First, the app uses far less data than other services—estimated at just 50 megabytes per hour of usage. Second, streaming content available on the service has a uniquely African focus, with channels like Africa4U, which offers programs that showcase African culture, innovation, and lifestyles; Nolly4U, which features Nigerian movies; and Mafrik, which is wholly devoted to West African music videos. Tuluntulu enjoys a reputation as THE go-to media streaming service in Africa, similar to how Netflix is perceived in the United States and other markets. Best of all, it’s free to download the app, and there are no subscription fees.

website coding

African Tech Startups: Raking in the Money

“The market in Africa is relatively unique in the sense that there are two major motivations. Investing in a market which globally has the largest growth potential is a huge draw, but so is the opportunity to have a significant positive impact, and accelerate the rate of development in countries which need it the most.”

– Simon Bransfield-Garth, CEO of Azuri

In 2015, African-based tech startups set a new record by amassing over $185 million in investor capital. According to various sources, tech startups in 2016 are on pace to eclipse this amount.

Many international investors are excited about the promise of smart and savvy tech companies on the continent. In fact, technology leaders such as Microsoft founder Bill Gates; Facebook founder and CEO Mark Zuckerberg; and Steve Case, the cofounder of America Online (AOL), are all joining the rush to stake a claim in this sector.

There are numerous reasons why industry giants such as Gates, Zuckerberg, Case, and others are attracted to Africa’s tech startups. This article explains three of these reasons behind this phenomenon and presents two examples of the continent’s thriving tech markets.

  1. Significant return opportunity

businessmanOutside of a small minority of charitable investors and benefactors, people invest in Africa to realize significant returns. To this end, Africa provides numerous profitable investment opportunities.

Many of Africa’s countries (for example, Nigeria and Kenya) are home to the fastest-growing economies in the world. These nations’ current economic expansion is being fueled directly by a proliferating middle class, who have seen their job prospects increase and their disposable incomes rise.

Africa’s large, young, and tech-savvy demographic is also driving its economic expansion. Both Bill Gates and Mark Zuckerberg have cited Africa’s young and educated citizens as a primary motivating force behind their investments.

  1. Social impact

While numerous African countries are privy to their homeland’s fast-evolving economy, a disproportionate number of African citizens must confront daily social ills. Some prominent investors are reportedly investing in the continent to help alleviate these omnipresent problems.

Such investors, including both Zuckerberg and Case, see their investments as not only a keen business decisions, but also potentially life-changing actions. Financial technology and alternative energy solutions are two startup sectors that are highly attractive to investors; this is partially due to the enormous difference that success in these industries can make in the daily lives of many African citizens.

  1. A “final frontier” marketplace

Africa is one of the last remaining places of economic significance that has not yet achieved widespread technology adoption. Consequently, enormous growth potential exists in multiple technology spheres.

Emerging African economies are spearheading a shift in investor attitudes—an observable shift away from the traditional, saturated market playbook of “low-risk, low-return,” to one of higher-risk but much higher return. Furthermore, many African nations have made notable progress in one area very important to investors: business-friendliness. Insiders state that reducing red tape and improving transparency has helped stimulate startup growth.

Startup Case #1: Off-Grid Electricity

solar arrayPerhaps no other economic sphere encompasses the aforementioned market advantages of Africa more aptly than off-grid electricity. With over 600 million of Africa’s citizens lacking a source of power, investing in off-grid electricity startups can lead to potentially-massive returns while achieving a massive social impact.

African innovations, including “pay-as-you-go” electrical services, have enticed many foreign investors into committing significant amounts of startup capital. This investment capital is being dispersed to various energy startups using a number of different technologies.

Solar startups are the recipients of more than one-third of all energy startup capital. One former startup that has witnessed remarkable success is M-KOPA Solar, a solar energy firm based in Kenya that many credit with popularizing pay-as-you-go electricity throughout the nation. Founded in 2011, the company has since expanded the sales of its home solar systems beyond Kenya to Tanzania and Uganda. According to the company’s website, M-KOPA has connected over 400,000 households.

Startup Case #2: Financial Technology

Second in total investment funds only to off-grid electricity, financial technology, or “fintech,” startups offer a compelling case for investment because they provide sizeable potential returns and create a positive social impact. Another trend inviting additional startup capital is mobile phone adoption. In Sub-Saharan Africa in particular, “mobile money accounts” are quickly gaining popularity, thereby allowing many Africans to access financial services for the first time.

Citing Africa as an example in the organization’s 2014 Global Findex database, World Bank Group President Jim Yong Kim stated: “Access to financial services can serve as a bridge out of poverty. We have set a hugely ambitious goal . . . But we can do it, and the payoff will be millions of people lifted out of poverty.”

power lines

How Innovative Energy Startups Are Powering Africa

Lack of electricity in Africa remains one of the biggest barriers to the region’s development and prosperity, and continues to trap millions of people in extreme poverty.

– The ONE Campaign

Nowhere else in the world are energy problems are more ubiquitous than in Africa. In sub-Saharan parts of the continent, which has a population of more than 915 million, over 50 percent of the population lacks access to electricity. As a result, economic development is stifled, and quality of life is severely diminished. Sadly, many educational institutions and health care clinics are deprived of the means to deliver much-needed services, which further compounds the problem.

However, the continent’s energy prospects may be changing. Visionary entrepreneurs from across Africa, ranging from Tanzania to South Africa, are leveraging the power of renewable energy to help solve Africa’s widespread energy crisis. Many startups have made sizable progress by providing sustainable sources of energy to the masses.

While much work remains to be done, small and budding startups are providing a glimmer of hope to African citizens. Following is a discussion of five African startups that have made significant strides in solving the challenging and complex problem of powering Africa.

  1. Off Grid Electric – Tanzania

off grid electric logoResidents of Tanzania have traditionally relied upon antiquated means of energy, primarily fire, wood and kerosene. Of course, the use of such materials is extremely hazardous to the health and safety of those who use them as sources of energy. The World Bank reports that in 2010, only 14 percent of Tanzanians had access to electricity.

In order to provide Tanzanians with a sustainable energy solution, the founders of Off Grid Electric have focused their business efforts on prepaid solar power systems. Off Grid uses a proprietary solar hardware and software platform that is available for customers to finance through mobile payments. In order to maximize output efficiency, the company complements its energy products by installing energy-efficient lighting and appliances in homes. Appliances are also available through financing.

Founded in 2011, the startup immediately garnered significant attention from foreign investors, including the United States government.

  1. Strauss Energy – Kenya

Strauss EnergyIn 2012, the World Bank reports that only 23 percent of Kenyan citizens had access to electricity. Over a span of just under four years, the percentage of Kenyans with electricity is now closer to 60 percent. Such prolific expansion has primarily been the result of solar innovation and adaptation. Strauss Energy in Kenya is a primary example of these transformative efforts.

Strauss Energy designs building materials that utilize Building Integrated Photovoltaics (BIPV). BIPV differs from traditional solar panels in that it comprises entire building sections: windows, roof tiles, and walls. According to the company’s website, the technology replaces the need for a secondary energy source for households. Additionally, BIPV is associated with lower energy costs

Recently, the company received a prestigious innovation award from DEMO Africa. As a result, company officials were invited to Silicon Valley to demonstrate and pitch their business to potential investors.

  1. Solstice – Nigeria

solstice logoCollaborating with leading researchers and engineers from Stanford University in California, Solstice has developed a business model that prioritizes data-driven energy solutions. The company’s innovative, data-reliant approach is evident in its products.

Solstice’s products focus primarily on energy monitoring and management capabilities. Marketed as a low-cost energy monitoring solution, consumers can observe their energy consumption patterns and make subsequent energy production changes through the company’s proprietary software. For instance, the Solstice mobile app can be used to budget and track energy usage.

In an effort to penetrate the increasingly concentrated Nigerian energy market, Solstice developed the Solstice Alpha Project. Participants in the project can obtain early access to developing products and services, which are available at discounted prices.

  1. Shakti Energy – South Africa

Shakti Energy LogoWhile municipalities and other concentrated areas of the South Africa have access to abundant energy sources, little effort has been made to expand into rural areas. It is estimated that around 90 percent of South Africa’s off-grid residents light their homes using kerosene and candles, an expensive and potentially dangerous practice.

Recognizing these trends, Shakti Energy focuses its efforts on the production and distribution of cheap and clean energy products. An example of this is the Nuru LED light, a portable energy source that is capable of providing at least 20 hours of light on a full charge. Other innovations include the POWERCycle, the world’s first commercial pedal generator.

In order to reach a highly distributed rural population, Shakti enlists the local workforce to demonstrate, sell, and service the products.

  1. Ugesi Gold – South Africa

ugesi gold logoSimilar to Shakti Energy, Ugesi Gold focuses on “rural and informal settlement electrification.” What separates Ugesi Gold is its emphasis on female-only owned franchises, citing the nation’s lack of progress in ensuring and safeguarding women’s rights.

In addition to the company’s unique ownership perspective, Ugesi produces innovative energy products and solutions. Product-wise, Ugesi manufactures a micro-utility unit called the SolarTurtle, a small, convertible mobile power station. Ugesi also manages and oversees the corporate social responsibility and enterprise development needs of privately owned establishments. This is considered a priority for many, as South African laws require strict adherence to legislation pertaining to corporate responsibility and certain developmental criteria.

Nigeria

Mark Zuckerberg Aims to Boost Startups in Nigeria

“I’m excited to see what Nigerians build next!”

– Facebook Founder/CEO, Mark Zuckerberg

Mark Zuckerberg
Mark Zuckerberg | Kris Krüg | Flickr

Mark Zuckerberg is perhaps the epitome of entrepreneurial success. Having founded Facebook in his dormitory at Harvard University, Zuckerberg leads a company that is now worth around $362 billion. His personal net worth? In the neighborhood of $54 billion.

Despite his overwhelming success, “Zuck” is commonly praised for his modesty, along with an unrelenting focus on making the world better. Zuckerberg, along with his wife, Priscilla Chan, launched the Chan Zuckerberg Initiative in 2015. According to its website, the organization was launched with the mission to “advance human potential and promote equality.” To help fund the initiative’s ambitious framework, Zuckerberg locates, empowers, and supports talented visionaries wherever they may surface.

The motivation behind the Chan Zuckerberg Initiative is pivotal to understanding the couple’s vested interest in African countries and other developing nations around the world. In a video interview on the initiative’s website, Zuckerberg and his wife speak passionately about human potential. He stated, “The only way that we reach our full human potential is if we’re able to unlock the gifts of every person around the world.”

Perhaps there is nowhere else in the world where is talent more ubiquitous—and yet, untapped—than in the West African country of Nigeria. Educated, entrepreneurial, and driven are three phrases that aptly describe a large share of the country’s people.

This article discusses Andela—a promising Nigerian company—and the country’s capable workforce that have drawn Mark Zuckerberg’s involvement. In addition, the following details the inferences that can be made of Zuckerberg’s first major investment in a private company and why Andela—Nigeria as a whole—is deserving of such.

Andela and African Education

andelalogoNigerian startups appear to be of particular interest to Mark Zuckerberg. This is evident from the dollars invested in nonprofit causes. In June, Zuckerberg and his wife’s initiative led a round of Series B funding for Andela—a Nigerian company that trains and deploys software developers—helping to amass $24 million for the (then) startup. In a statement issued about his investment in Andela, Zuckerberg noted, “We live in a world where talent is evenly distributed, but opportunity is not. Andela’s mission is to close that gap.”

Zuckerberg’s investment in Andela is noteworthy for a couple reasons. First, this was the initiative’s first major investment in a private, for-profit company. It is telling that, out of the likely multitudes of entrepreneurs that sought funding, Chan and Zuckerberg invested in a Nigerian-based startup. Second, the venture falls in line with one of the initiative’s founding tenets: enhancing education and personalized learning. It appears that Zuckerberg’s stated mission in developing the initiative also pertains to the profit-seeking arena.

Investment in Andela may also support the third pillar of the Chan Zuckerberg Initiative: advancing opportunity. Nigeria is considered a nation ripe with human talent, particularly in the fields of information technology, software development, and computer science. However, this abundant talent pool is lacking in job opportunities. Approximately 45 percent of Nigeria’s college graduates are unemployed. This may help to explain Chan and Zuckerberg’s interest in Andela, as the company trains and places applicants into well-paying jobs.

On a related note, Zuckerberg seemingly devotes a considerable amount of his resources to training and education-related investments. In 2010, the Facebook CEO made headlines with a $100 million donation to public education in Newark, New Jersey. At the time, New Jersey public schools were facing drastic cuts to their budget, severely handicapping the system. Zuckerberg is a fierce advocate of education and training, whether in the public or private sphere.

In the area of information and education, Zuckerberg partnered with Nigeria’s largest mobile network with the goal increasing Nigerians’ access to the web. As a result, a number of Nigerians who previously lacked Internet access or any other means of information, were able to go online at no cost. The Free Basics program, as it’s called, is active in more than 40 countries, half of which are in Africa.

Future Developments

On August 30, Zuckerberg announced his visit to Lagos, Nigeria, on his Facebook page:

“Next stop: Lagos! This is my first trip to sub-Saharan Africa. I’ll be meeting with developers and entrepreneurs, and learning about the startup ecosystem in Nigeria. The energy here is amazing and I’m excited to learn as much as I can.” Nigeria is also home to Facebook’s largest African market, with over 16 million visitors to the social media site.

Co-Creation Hub NigeriaDuring his trip to Lagos, Zuckerberg visited the Co-Creation Hub Nigeria (CcHUB), where he met with young children attending a coding camp. CcHUB functions as a “tech lab” where hackers, impact investors, technologists, government, social entrepreneurs, and tech companies meet in an effort to create solutions to current social problems impacting the country.

At present, Zuckerberg is continuing his trek through Nigeria. Known his secretive nature, “Zuck” hasn’t produced his travel plans.

News sources in Nigeria speculate that he will visit Andela’s operations and meet with other promising entrepreneurs.