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PE, VC execs banking on African tech boom over next three years

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Private equity and venture capital execs are banking on an African tech boom over the next few years amid the rapid expansion of the continent’s startup ecosystem, new research shows.

Almost 60% of the 100 PE and VC senior executives interviewed by PureProfile predicted sector growth of 50% or more on the continent within three years, while about one in five put the figure at 75% or more.

It said improvements in the business environment in Africa will be the key driver, with more than half of those surveyed saying the business environment on the continent is improving, while 41% point to greater geo-political stability and 36% say the ongoing expansion of internet connectivity will support a tech boom.

More than half of the respondents believe that will lead to Africa becoming a tech superpower within 10 years, while 39% believe the continent will achieve that status within 10 to 20 years.

Micky Watkins, CEO of World Mobile, the blockchain-based mobile network that commissioned the research, said, “Private capital investment in Africa hit a record high of $7.4bn last year as venture capital and private equity investors poured money into projects and investment funds.

“Technology is a key area for start-ups and there is increased confidence in rapid growth with a majority of investors expecting a 50% increase in just three years. Governments in the continent are focused on supporting private businesses and political stability is also important.

“But the importance of internet connectivity is growing, particularly for areas where delivering affordable and reliable connectivity remains an issue.”

This summer AfricInvest and Cathay Association raised a €110m venture capital fund to target promising African early-to-growth-stage startups, working in areas such as fintech, mobility, healthtech, edtech, AI, digital content and agtech.

Earlier this year AltAssets spoke with Norrsken about its new Africa-focused tech fund, which the firm believes is leaping on a giant opportunity other investors are missing.

“In certain areas of technology, Africa is running behind the developed world and certainly from a capital perspective, the continent is lagging,” Norrsken22 general partner Natalie Kolbe said. “But the upside of this is that you can still find sensible valuations.”

She added, “Africa has the opportunity to leapfrog certain legacy industries much quicker than in other markets where legacy players are more established. And in that way, take advantage of the technologies that are being developed and make those sectors more efficient.”

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  • Source: https://www.altassets.net/knowledge-bank/industry-focus/technology/pe-vc-execs-banking-on-african-tech-boom-over-next-three-years.html

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