Why Tech Investors Should Be Looking At Francophone And Lusophone African Markets
When it comes to news on startups, innovation, or funding in Africa, English-speaking markets seem to get most of the attention, but investment opportunities exist in African tech ecosystems dominated by other languages.
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Is this just about the language barrier, and is this picture starting to change?
The funding gap in Francophone markets is huge, according to Gregoire Depadirac, investment manager at Orange Digital Ventures. Something’s missing, he said: angel and seed funding.
“In the top three of Kenya, Nigeria, and South Africa, most angel funding is coming from the U.S. and Europe, building step-by-step ecosystems with their first cohorts of entrepreneurs and success stories,” he said.
“Without angel and seed funding, Francophone entrepreneurs are doomed to bootstrap, focusing more on business models that can break even from day one rather than business models ready to scale and burn cash.”
The same is true in Portuguese-speaking Africa, according to Pedro Beirão, co-founder and CEO at Angolan e-health startup Appy.
“The reason is because of a lack of knowledge about the existing ecosystem of startups, and also a deeper lack of knowledge of those countries, like Angola, Cape Verde, São Tomé and Mozambique, their realities, their economy, and their needs,” he said.
Investors and corporations ignoring Francophone and Lusophone markets are missing a trick, however. Angola has the third largest economy in sub-Saharan Africa, much larger than Kenya’s and about the same size as Morocco’s, said Luis Verdeja, CEO and co-founder of Angolan recruitment startup Jobartis.
“And competition is very low, so the cost of entering the market is marginal, compared to the gains that can be obtained,” Verdeja said. “This gives you enough breathing space to grow a company that can later look into other markets in the region.”
First-mover advantage in non-English speaking African markets
Erickson Mvezi is the CEO of Angolan deliveries startup Tupuca. One advantage of pursuing business in countries like Angola is that you are more likely to have first-mover advantage, Mvezi said.
“If investors move now, they get the best deal at a lower cost. What is happening in Lusophone Africa is nothing new. After the traditional African markets saturate, the next frontier will be the Lusophone markets. So the time is now,” he said.
Both Lusophone and Francophone markets are seeing ecosystem developments that will encourage the arrival of more capital. On the Francophone side, Depadirac highlights the arrival of the Dakar-based Partech VC fund, an increase in the number of incubators, and the recent L’Afrique Excelle program run by the World Bank.
“There is still a significant journey to bridge the gaps. Francophone ecosystems are still burgeoning – accelerators are very young, most entrepreneurs are first-time entrepreneurs, and very few already raised funds,” he said.
What are governments doing? More and more, according to Depadirac.
“Most governments are waking up to the potential of digital entrepreneurs. Senegal paved the way with one of the most emblematic initiatives led by La Délégation Générale à l’Entreprenariat Rapide, which allocated $50 million to support entrepreneurs,” he said.
“Some Francophone countries are about to join the league of nations enacting a Startup Act.”
Progress is being made, then, and there are reasons to be optimistic outside of English-speaking markets.
“Deal flow has been growing for the last two years, and investment readiness is significantly increasing. More and more startups are getting good traction, and some have already raised their Series A rounds,” Depadirac said, highlighting massive untapped markets, and the ease of scaling provided by monetary union and harmonised legal environments in Francophone West Africa.
Aziz Sy, co-founder of Senegalese incubator Impact Dakar, says entrepreneurs in Francophone and Lusophone markets are just as talented and resilient as elsewhere, building top quality startups that are gaining traction.
“Startups are now starting to look at West Africa as a bigger market and are getting the required feedback from investors and mentors alike. The first investors to be in the market will reap the highest benefits,” he said.
“The quality is there, the entrepreneurs are battle-tested, the money is all that’s missing.”
Tom Jackson is co-founder of Disrupt Africa, a news and research company focused on the African tech startup ecosystem.