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Thursday, Apr 25th

'Growing investor interest in African tech landscape'

'Growing investor interest in African tech landscape'

Just as news broke that Africa's first billion-dollar online marketplace Jumia filed for an IPO and was looking to list on the New York Stock Exchange (NYSE), Greg Cohen, Executive Director of Asoko Insight said there was growing investor interest in the African tech landscape.

Asoko Insight is a corporate information platform that provides market mapping solution to investment firms and research on private sectors across the continent.

Cohen said investors are aware of the low cost involved in setting up in Africa amid ongoing consumer challenges.

"The African tech market is nascent and start-ups are beginning to access more venture capital to finance solutions for big challenges. The US has an abundance of solutions for consumer challenges and is therefore more difficult for entrepreneurs to build scalable and impactful products. Across Africa, it's cheaper to come up with an impactful solution as consumer challenges are abound. There's just so little capital to finance growth of these solutions. Investors are sensing the opportunity."

The co-founder of Kumba Africa travel platform, Tapiwa Ndlovu, agrees that there is growing interest in the African tech landscape but maintains that funding in this regard is still low, especially from the US.

"We have seen the first 'unicorn' in Africa, Jumia, and there are more start-ups that are being funded, especially FinTech. The amount of US funding in African tech companies is still low, to be honest, and there are a number of factors," Ndlovu said.

"Firstly, it is difficult for investors to sometimes invest in African start-ups as they are not too familiar with the environment. However, some data analytics companies are (now) making it easier for these investors to obtain more data about start-ups to invest in."

The difference between how tech companies operate in Africa and the US (particularly in Silicon Valley) is another factor, according to Ndlovu

He believes the expectations of US venture capitalists may not be met in Africa – even if growth is visible in a start-up company.

Having African investors would be a better option, he said. "I think we need to have more Africans investing in their own continent, and making it possible for more start-ups to produce solutions tailored towards our continent. Time will tell (as to) how much progress is made in this respect."

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