Can Africa Justify The Hype Surrounding Its Tech Scene?

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Written by Staff

From Investopedia. Story by Brett Relander.

The expansion of the startup scene in Africa has been so vigorous that there are concerns that the actual value generated by such startups might not measure up to the rapidly rising hype, thus making it unsustainable.

To be certain, there is a lot of hype.

VC4Africa, a community of early stage investors and startups, reports that investments made through their platform doubled last year, increasing from $12 million in 2013 to almost $27 million in 2014. Those investments appear to be well worth it, as the community of investors further reports that almost half of all ventures begin generating revenue during their first year.

It is not just domestic angel investors who are interested in the startup tech scene in Africa. An increasing number of foreign investors are also turning their attention toward the breakneck speed at which technology is erupting in Africa.

NewGenAngels based in London is just one of the early stage funds and angel networks working to ensure that startups in Africa have the funding necessary to sustain their growth.

Among the most influential of those startup accelerators at the moment is Think. With backing from Millicom, the telecom giant, this Rwanda-based accelerator takes an interest in companies with the ability to expand across Africa. Providing funding, office space resources, and network access to customers and investors, Think is changing the way that Africa views tech.

Startup 90 is relatively new to the scene in Africa. Launched just last year, this program specifically looks for unique startups in South Africa with ample potential. The startups chosen by Startup 90 make their way through a three-month program during which they receive workspace, tools, and access to well-known mentors.

Savannah Fund works a bit differently. This seed capital fund specializes in raising investments ranging between $25,000 and $500,000 to provide early-stage investments in African tech startups. In exchange for investments, the accelerator program receives a 15-percent equity stake in each company.

Read more at Investopedia.