Africa’s Tech Eco-System – Past, Present and a Promising Future

Ido Sum is a speaker at the Tech in Ghana Conference London

When looking at the African tech ecosystem – one fact dominates all others. It is still in its real infancy, writes Ido Sum – a founding team member of Africa tech VC firm TLcom TIDE Africa.

These are very early days for the local tech environment and players, and when coming to estimate its present and future potential – this must be front of mind.

While usually tech companies take 8-12 years to mature (yes – not all of us are Instagram…) even in the most advanced global tech hubs, many of us fail to remember that Africa’s ‘formal tech eco-system’ has been around for just over half a decade. It is only fair to conclude that lack of big success stories is first and foremost a result of the very short period of the communities’ existence in Africa, before looking at any other factor.

Based on the Global Startup Ecosystem Report, there are five key factors to measure a strong and supportive eco-system: Performance (valuations and exits); Funding (Angels, accelerators and VCs); Talent (Quality availability and cost); Market Reach (size of local eco-system’s GDP and ease of access to other relevant markets); and Startup Experience (such as having relevant experienced mentors, advisors and founders).

Taking a deeper look into some of the key ingredients of the top global tech hubs (Silicon Valley, NY, Tel-Aviv, London etc.) it is easier to recognise some of the key gaps and challenges Africa is fronting, and think through creative solutions to help Lagos, Nairobi and Cape Town mature into world class tech hubs:

Performance: We are lacking high quality data on financing, valuations and exits. Disrupt Africa is one of the several initial databases in the space – but we need open accessible data on funding to build trust and ignite interest.

Funding: As partner at TLcom TIDE Africa I know how hard it is to raise capital in these markets. With that, we need to drive more capital into African VC funds (locally based, and most critically with an ability to locally support and mentor their investee companies), as well as focus on the few top accelerators and potential Angels within the eco-system through education. On The funds front, it is key to remember that VC backing is NOT just about the financing, but about the support, experience and networks they can bring to help build stronger and better companies. At the early/seed level, while there are +150 accelerators and incubators, we must recognise the very few best preforming ones and focus on supporting them first. On top, an open system to help founders find Angel and Seed funders is also needed – TLcom will soon release its contribution to that space, so watch out.

Talent: Average age of tech entrepreneurs in the world’s leading eco-systems is 36 – 40% of the top teams comes with relevant high growth tech companies. Africa’s talent pool is still small and relatively inexperienced – we need all the help we can get! Focus on pulling experienced team members / co-founders (even for more equity!), hire relevant industry people when needed (yes – from ‘old industries’ too), and don’t be afraid of mixed teams of local experts and people who bring experience from outside (either as advisors, mentors or team members). There is no ‘right formula’ here – but talent and team is the key for it all.

Market Reach: Start in big enough markets (test small and grow fast), and we need to take advantage of common markets in East, West and southern Africa to be able to target meaningful market size opportunities and create scale and big visions. This translates into picking problems that are not too local, and that can be solved across regions or the continent as a start.

Startup Experience: This was touched on initially in Talent above, but don’t forget to mix and match local and global, young and experienced and industry insiders and outsiders to make sure you cover your most critical knowledge gaps. To add, share knowledge! Ideas (and IP) rarely win in such environments as Africa (which is more about business model innovation solving real and painful problems rather than core technology differentiation). It’s all about execution and best practices, so there is much more to win than to lose in sharing knowledge and experience within our developing tech community across Africa.

So, to conclude, the more open and collaborative environment we will build and promote – the better. World class tech eco-systems measure first and foremost in their ability to support each other (among founders, funders, advisors and talent in general) – as in this very fast growing and overly competitive environment – it is pretty much impossible to strive alone.

For more, feel free to reach out: ido.sum@tlcomcapital.com

Ido is part of TLcom TIDE Africa‘s founding team (Africa’s leading Tech VC, based in Nairobi, Lagos and London), focused on early and growth tech investments across Africa. Add him on LinkedIn and follow him on Twitter

Ido is a speaker at the Tech in Ghana Conference London. The event is sponsored by Vodafone Business Solutions and WorldRemit, and will be held on Monday 27th February. Read more here