Mapping The Tech Ecosystem At Africa’s Biggest Startup Event

Mapping The Tech Ecosystem At Africa’s Biggest Startup Event

Last year, the annual AfricaCom conference in Cape Town finally got serious about startups, launching the co-located AHUB event to bring together entrepreneurs, investors and other stakeholders from across the continent.

The event took place for the second year last week, bigger and better, and allowing the ecosystem to join together to map the sector’s progress and discuss obstacles.

“The AHUB brings together hundreds of business ready entrepreneurs to understand the latest technologies to serve their needs in scaling up and monetizing – from a budding app or web business into an internationally recognized brand,” the organizers said.

That it certainly did. Here are a few key takeaways from the event.

Connectivity has to improve

Sponsors Ericsson made a big show of how much progress has been made in improving the quality of internet service in Africa, but the feeling on the ground was that much more needs to be done.

One panel was dedicated to ICT for development, with those taking part unanimous that more must be done to improve internet access. Alan Knott-Craig of Project Isizwe, which is rolling out free Wi-Fi in South African cities, highlighted the need for more connectivity to increase the market size for startups.

Yet where this action is going to come from is unclear. Shiletsi Makhofane of Ericsson thought private sector leaders could pick up the buck, but most agreed government action has been far too slow, and that African governments do not understand the tech space.

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For Kehinde Oriola, who runs Nigerian e-commerce startup DealDey, governments are not going to get round to fixing the problem any time soon and the private sector – startups and corporates – must work together to fix the problem.

Not enough investors or not enough startups?

Ask a startup, they say there is not enough funding. Investors often feel differently.

Panellists at AHUB said it is often a bit of both, but that if you are a good business, there is money there for you. Gil Oved, Shark Tank TV star and The Creative Council co-CEO, said startups should learn to “speak investor” if they are to get funded.

For Peter Allerstorfer of Silvertree Capital, key is demonstrating traction and revenues, as opposed to having a nice idea and a PowerPoint presentation. Knife Capital partner Andrea Bohmert said it was vital to see expertise and passion in a founder.

It goes further than that, however. Investors need to like you. Chanzo Capital managing director Eric Osiakwan told the event the vast majority of his investments had been made through his personal network and having got to know the entrepreneur in question. Bohmert said given the long time-frame of an investment, and how closely entrepreneurs and investors worked together, liking each other was a vital prerequisite.

Fintech startups are not going to take over the world

After solar, fintech startups are the most popular investment destination in Africa, according to the Disrupt Africa African Tech Startups Funding Report 2015. But they are not going to have it all their own way.

That is the view, anyway, of John Staley, chief officer for finance, innovation and technology at Kenya’s Equity Bank. Staley said the banking of the future in Africa will still be undertaken by banks, in spite of the growth of the fintech scene.

This is because of the low margins in payments, where many fintech startups are active, and the need for a float when it comes to loans, where others are trying to carve out a niche. Staley said banks recognised the need to work with fintech startups, but they would rather be adding to the sector rather than changing the way it works.

One panellist disagreed with this to an extent. Goodwell Investments founding partner Wim van der Beek said the area where fintech startups could really make an impact was in areas where banks had failed to reach, and there was nothing to disrupt. In these areas, he said, it would be fintech startups providing financial services, and not incumbents.

Becoming a tech hub can be crucial to a city’s development

Cape Town, the host of the event, has been making efforts to establish itself as a tech hub. Tim Harris, CEO of Wesgro, said establishing your city as a tech hub for the country or region could be a crucial factor in its economic development.

He said a number of factors were needed in order to do this, including skills and the city itself being a nice place to live, which Cape Town undoubtedly is. His only qualification was that for tech hubs to develop their needed to be strong enabling environments, both in the form of industry groups like Silicon Cape, and government backing, which may be what is lacking in South Africa right now.