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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.”


3 Ways the US Supports Promising African Entrepreneurs

“I’m here because, as the world gathers in New York City, we’re reminded that on so many key challenges that we face – our security, our prosperity, climate change, the reduction of conflict – Africa is essential to our progress. Africa’s rise in not just important to Africa, it’s important to the entire world.”

–  United States President Barack Obama

Many African countries are experiencing tremendous economic growth, and while more work remains to be done, the future seems promising. One factor that has contributed significantly to Africa’s success is the number of bright, hardworking entrepreneurs on the continent. These entrepreneurs have successfully launched startups in a number of economic sectors, including finance, financial technology, solar and alternative energy, education and training, and many others.

Leaders of nations around the world understand and appreciate the importance of an economically-viable Africa. As such, these countries have committed significant resources to stimulate an African economy brimming with potential.

This article examines three of the organizations the US government has established to help buttress Africa’s growing economy. In particular, it discusses a number of commitments made to assist African entrepreneurs.

  1. YALI and the United States African Development Foundation

YALI logoIn December 2013, President Obama started a program called the Young African Leaders Initiative (YALI) to “provide virtual resources and vibrant physical spaces to equip young African leaders with the skills and connections they need to foster change in their communities and their countries.” Members of YALI have access to virtual training in leadership and entrepreneurship, as well as a Facebook group, through which they can connect with other young leaders.

In August 2016, the United States African Development Foundation (USADF) awarded 50 African entrepreneurs from 20 countries a total of $1.25 million. These new business owners will use the money as seed capital for growing their respective companies and social ventures. Since 2014, USADF has awarded more than $2 million of grant funding to 95 YALI entrepreneurs.

  1. African Women’s Entrepreneurship Program

Women comprise a significant number of Africa’s entrepreneurs and business leaders. To empower this important demographic, the Obama administration designed and implemented the African Women’s Entrepreneurship Program (AWEP). The rationale behind the initiative’s founding is that, while African women provide a disproportionate AWEP logoamount of the continent’s labor, they often lack or are denied access to the necessary resources needed to drive economic growth. Furthermore, while Africa’s female entrepreneurs have made significant contributions, they remain economically disenfranchised in several areas, such as Sub-Saharan Africa.

To counteract the obstacles to African women’s full economic participation, AWEP establishes networks of women entrepreneurs. Through these connections, women business owners can grow their companies, increase trade, improve the business environment, and give voice to important issues in their communities. Entrepreneurial sectors represented by AWEP include agri-business, fashion, food processing, and home décor and textiles.

  1. United States Agency for International Development

The United States Agency for International Development (USAID) focuses its efforts on “expanding and deepening partnerships with African governments, businesses, universities, and civil society— as well as with the new generation of African leaders, thinkers, entrepreneurs, and innovators, who are leading the transformation of their USAID logosociety.” Currently, USAID supports a variety of African energy entrepreneurs, particularly those who aim to provide electrical power to Africans who are off the grid.

In August 2015, President Obama announced the awarding of up to $100,000 to 11 energy companies from Ethiopia, Ghana, Kenya, Nigeria, and Tanzania. Via a collaborative partnership with General Electric (GE) Africa and the USADF, USAID has committed to supporting novel energy solutions with the goal of expanding access to affordable, reliable, and sustainable power sources.

Entrepreneurs benefitting from the funds are working on a number of energy solutions, such as home solar systems, solar-powered mini-grids, and micro-financing of assorted energy technologies, predominantly for rural communities. Of the projects that received funding, five specialize in solar systems, three are biogas regeneration projects, and one is constructing a small hydro-electricity power plant. As these firms complete their projects, nearly 10,000 Africans will gain access to electricity and power for the first time.

Future US Commitments in Africa

President Obama spearheaded all three of the abovementioned organizational mechanisms supporting African entrepreneurs. Because the President is nearly at the end of his term, it is difficult to predict whether or not such efforts will continue after he leaves office.

Fortunately, the administration has been working closely with the private sector in efforts to keep the projects funded. The Overseas Private Investment Corporation (OPIC), for example, plans to contribute $200 million as part of a $450 million loan from Equity Bank Group to small and medium-sized African enterprises focused on young people and women over the next four years.

In collaboration with Deutsche Bank, USAID undersigned $25 million of the $50 million to be distributed to social enterprises in developing nations around the world, including Sub-Saharan Africa. According to the White House website, these funds will be used to support entrepreneurs in the energy, financial services, and health sectors.

At the Global Economic Summit (GES) of 2015, the President reemphasized the importance of private sector leaders supporting entrepreneurs around the globe, including in Africa. At the conclusion of GES, it was revealed “private sector companies…committed to train and mentor over 1 million burgeoning entrepreneurs and pledged nearly $700 million of capital.”

music clef

5 Innovative African Startups Exciting Music Lovers and Musicians

In just one year (2014–15), music streaming subscriptions experienced a growth upwards of 50 percent in the United States alone. CD sales in that time period? Down 17 percent.

The reason is quite simple: most music enthusiasts would rather have an unlimited supply of tunes at the tap of a virtual button than pay for a single CD. Additionally, many music streaming services are available at no cost (albeit with ads). If this sounds like a losing proposition for record labels, that’s because it is.

As music streaming has found a following within the US, its popularity has increased around the world as well. Perhaps there is no place where this is more evident than in Africa, where music lovers and savvy entrepreneurs have fully embraced the evolution that is music streaming.

One way in which Africa’s music streaming market has differentiated itself is the proliferation of streaming startups. As opposed to the US and many other nations, the market is not nearly as saturated, thereby presenting a considerable opportunity for a number of ambitious entrepreneurs to stake their claim in a rapidly expanding market.

Here are five African music streaming startups that are making headlines:

  1. RadioVybe

radiovybe logoBased out of Johannesburg, South Africa, RadioVybe is a relatively new startup, with sizable potential. Launched in March 2016, founders of the company seek to make their iOS and Android app available on every handset throughout Africa.

The company interweaves streaming music capabilities with social media interaction—an innovative approach that the company hopes will translate to widespread reception and adoption.

To accomplish its goal, RadioVybe leverages the power of social media in three key ways.  First, an in-app feed permits users to observe their friends’ oft-visited radio stations, and then navigate to these stations themselves. Second, the app enhances interactivity between the user and radio station, allowing the consumer to post messages to the radio station’s social page(s). Third, the end-user can “connect” with their favorite artist or artists’ social networks and follow their work.

  1. Mozik

Launched in August 2016, Mozik, the newest startup on the list, is a streaming service based in Mozambique. Focusing its efforts on small-market artists, Mozik presents the opportunity for Mozambican artists to capitalize on their work.

Mozik LogoGuerte Geraldo Bambo, founder of Mozik, explains the rationale behind the company’s business model: “With three years of experience, something was clear: the Mozambican music ‘industry’ will never gain relevancy if musicians don’t make money out of their music.”

Bambo claims that around 90 percent of musicians are unable to escape poverty, even if they have an established fan base. It is believed that the undeveloped nature of Mozambique’s mobile networks, limited smartphone availability, and other economic factors greatly inhibit these artists’ ability to make a living.

Understanding these trends, Mozik offers musicians the opportunity to sell their works online. In doing so, Bambo and others hope to further develop the nation’s music industry, establish a means of income for artists, and allow for more widespread distribution of musical works.

  1. Mvelani

Similar to Mozik, Mvelani aims to rectify the disproportionate “play, but no-pay” activity mvelani logoprolific within the African music market. The startup’s mission is to “offer music fans a legitimate service capable of generating for artists the royalties that they deserve.”

In that vein, Mvelani has established a platform that allows artists to participate directly. After creating a Mvelani account, artists are able to upload their songs and make them available to users, at a modest cost.

The startup’s next goal is to develop and launch a mobile app that permits offline streaming. Currently based in the underdeveloped nation of Malawi, the company has plans to expand the popular service to neighboring countries. Nigeria is thought to be the first country, as development planning has reached the final stages.

  1. Mdundo

Mdundo logoLaunched in 2012, the Kenyan startup Mdundo has experienced remarkable growth. Now available in 17 nations, its business model emphasizes artist collaboration and egalitarian disbursement of profits. To date, this framework has been an enormous success.

Available on the “big three” platforms (iOS, Android, and online), music is available for both streaming and download. Following a series of investments from companies such as seed accelerator and Google partner 88mph, the company was able to enlist an additional 15,000 artists.

The startup now claims over 750,000 users across Africa.

  1. Zimbo Music

Startup Zimbo Music is a music streaming platform designed to engage local artists in Zimbabwe. Launched in 2014, the site acts as a web portal for artists, who can upload bios, music, and pictures, as well as actively promote their events.

According to sources, the startup has experienced significant growth. The founders, who are artists themselves, are planning to expand into Botswana, South Africa, and Zambia. As with Mozik, the minds behind Zimbo Music seek to empower artists. Co-founder Makhosini Mpofu stated, “We had first-hand experience of how hard it is to make name for yourself, grow your fan base and get exposure. A lot of talented artists find it very hard to make it to the big time and get their music out there. We saw the need to breach that gap.”

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.


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.