As we come to the end of the first month of the new year, we are excited to return to your inbox with weekly updates, providing news analysis on happenings in the African tech ecosystem.
In 2023, African startups secured $2 billion in funding (mostly equity), down 43% from $3.3 billion the previous year. While this may seem like a recession, it signifies a maturing ecosystem that emphasizes quality over quantity.
The “Big Four” markets in Africa—Nigeria, Egypt, Kenya and South Africa—retained their position as top investment destinations. Interestingly, Ghana gave away its fifth place to DRC, which reflects the potential for new technology hubs to emerge on the continent.
Stay tuned later this week for more information as we unveil the State of Tech Venture Financing in Africa report.
In today’s letter, we explored:
- The launch of Accelerate Africa by Iyin Aboyeji and Koschitzky-Kimani
- Amazon’s plan to cut Prime in Africa and the Middle East
- Tech trends that will shape 2024, according to three African investors
We also covered other noteworthy information, including the latest African tech deals, opportunities, interesting reads and more.
The big three!
#1. Why Iyin Aboyeji Wants to Build “YC of Africa”
The news: Last week, Iyin Aboyeji, founder of Future Africa, a Pan-African VC firm, together with Mia von Koschitzky-Kimani, general partner of the firm, announced the launch of Accelerate Africa, a comprehensive accelerator program that aspires to “Y Combinator (YC) of Africa’.
“For a long time, I told anyone who would listen that YC of Africa is YC and there was no need for an African accelerator. I changed my mind,” Aboyeji said. “Before now, we’ve mostly run successful pre-accelerator programs to help founders get into actual accelerator programs like YC and Techstars. Now we’re entering the accelerator arena ourselves.”
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Y Combinator, a global accelerator based in Silicon Valley, has invested in more than 4,506 startups worldwide. About 80 of these startups have roots in Africa, including Flutterwave, a fintech business co-founded by Aboyeji.
Accelerate Africa is launched with a $750,000 USAID grant.
Why it matters: According to Aboyeji, “With rising interest rates… the global appetite for venture capital for African innovation and entrepreneurship has decreased drastically and with it the interest of most global accelerators like YC to invest in African startups.”
In 2023, Y Combinator’s investments in Africa are down 81% year over year. Only six African startups were selected for its semi-annual accelerator last year, the lowest since 2018.
While other global accelerators like Techstars are increasing their support for African startups, the former co-founder of Flutterwave and Andela believes it is time for Africa to go its own way, free from Silicon Valley standards, as he believes that “Africa has come of age.” .
“That’s why we’re building Accelerate Africa – to accelerate bold and visionary founders building global businesses to solve Africa’s biggest challenges,” he added.
Zoom in: In each cohort, Accelerate Africa will welcome 10 startups, providing them with upfront or early stage funding ranging from $250,000 to $500,000. The application for the inaugural cohort is currently open.
Lagos Tech Fest returns for its 4th edition in February
Join Ife Durosimi-Etti, Oyin Solebo, Jude Dike, Kehinde Olateru and other tech leaders at the Lagos Tech Fest event at the Landmark Event Center, Lagos on February 15, 2024. Lagos Tech Fest brings together entrepreneurs, disruptors, innovators, investors, entrepreneurs and technology enthusiasts.
#2. Amazon Prime cuts funding and staff in Africa
The news: Within just a year of its first African original, Amazon Prime Video, the US streaming service, is reportedly tightening its budget and laying off staff in its Africa and Middle East teams.
Despite the initial intention to “create high-quality content that will appeal to all African storytellers, crews and talent”, the latest measures include the suspension of local original producers. Last year, the service premiered its first two African originals. Gangs of Lagos and Last One Laughing in Naija.
However, the service will continue to premiere LOL ZA, Ebuka highlights Africa and Garri and Water, three recently commissioned African prototypes later this year.
It is important to note that Amazon Prime Video will maintain its presence in both regions and continue to upload non-original movies.
Learn more: According Varietya Los Angeles-based publication, Prime Video is undergoing a restructuring of its international operations, shifting its focus to European originals.
Prime Video EMEA Vice President and General Manager Barry Furlongsaid the restructuring intends to “prioritize resources on what matters most to customers… rebalance and direct resources to focus on the areas of highest impact and long-term success.”
Zoom in: Several Nigerian film producers and analysts have blamed Prime Video’s withdrawal on a lack of understanding of the African streaming market.
According to Anita Eboigbe, co-founder of In Nollywooda publication covering the Nigerian movie industry, “Amazon Prime was largely insensitive to the Nigerian (and African) market…They approached the market like audiences would just jump on things for whatever reason. You almost had to beg them to market their works”.
In the African market, Prime Video is the third largest streaming service, after Netflix and Showmax. According to predictions from Digital TV researcha market intelligence company specializing in streaming platforms, Prime Video, which currently has around 600,000 subscribers, is expected to see significant growth, reaching 3.14 million subscribers by 2029.
However, his plan to limit the continent will affect this projection.
#3. Technology trends that will shape Africa in 2024
Start here: Six of the seven predictions we tracked last year came true. To kick off the new year, we’ve curated five tech trends that will define African tech VC investments in 2024 from three African investors—Efayomi Carr, Principal at Flourish. Basil Moftah, General Partner of Nclude; and Zachariah George, Managing Partner at Launch Africa Ventures.
- Increased cleantech funding: “The rise of climate finance is a remarkable development, with significant capital available for development in the African energy sector. Sectors such as renewable energy are expected to attract significant investment, attracting innovation-driven finance,” Carr said.
- Growing Adoption of Artificial Intelligence in Africa: Carr, Principal at Flourish also predicts that AI adoption will increase in the African market. He said, “While AI has already demonstrated its transformative impact on startups in established markets such as the US, its influence is expected to grow significantly in the African context.
- The road to profitability: Although businesses often require capital injections for growth, they are neededis to articulate a clear path to profitability. Moftah says that “investors are likely to impose more stringent criteria to ensure this trajectory. This reflects the increasing emphasis on sustainable financial models.”
- ESG will take the first row: Moftah also suggests that environmental, social and corporate governance (ESG) will be at the forefront. He notes, “The days of investors simply writing checks and hoping for the best are dwindling. Governance, in particular, has become a focal point of attention for investors around the world.”
- Working with companies… and mergers and acquisitions: According to George, “Mergers and acquisitions will expand significantly as [big startups]… [look to] increase their market share. This will be a great trend because more mergers and acquisitions means there are exit opportunities for investors.” Moftah also predicts increased consolidation: “Companies are either going out of business or being acquired by their competitors. This trend, particularly in fintech, promises to eliminate redundant ideas and increase scalability,” he said.
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💰 Funding situation in Africa
African startups raised at least $18.3 million last week. Funding was dominated by Egyptian startups operating in the fintech, autotech and healthtech sectors.
📚 Remarkable
Here are other major media stories:
💼 Opportunities
Jobs
We carefully curate open opportunities in Product & Design, Data & Engineering, and Admin & Development each week.
Product design
Data & Engineering
Admin & Development
Other opportunities
- For African founders: Applications are open for the Accelerate Africa accelerator for startups on the continent. Deadline: February 16.