African startups are expected to raise more than a billion dollars by 2018. According to Partech Ventures, the VC funding raised by African startups reached $367 million dollars in 2016, representing a 33% year-over-year growth. In fact, fundraising by African startups has grown by an explosive factor of 8.7x over the past four years.
Business opportunities, most often disguised as obstacles, are waiting for those that have the courage to get out of the living room and to stop judging places based on TV, says Amnesty’s Global Council member Bassim Haidar, whose fintech group is powering mobile loan transactions that amount to more than $2 million a day in Nigeria alone.
Union Square Ventures’ Fred Wilson alluded to these opportunities when he wrote about VCs that have the foresight to set up shop in emerging markets and leverage the “second smartphone revolution,” e.g., the next 2.5 billion people to adopt smartphones, as various ways they will accessmobile content & services remains to be shaped. With a projected African smartphone user base of 725 million, answering this “how” question is becoming an increasingly relevant topic in Silicon Valley.
All this activity signals an important shift: Africa is no longer an inhospitable place for tech investing; it is emerging as a viable market that is rewriting the rules of entrepreneurship by enabling a new generation of investors to nurture a truly global ecosystem. Along with tech hubs, universities, and investor networks, the diaspora is another critical component of Africa’s viable investment market. A recent Pew Research Center study points out that Africans are becoming one of the fastest-growing immigrant populations in the U.S. African immigrants aged 25 and older are among the most educated demographic groups in the U.S., with about 35% having at least a bachelor’s degree.
African immigrants are using mobile apps to stay in touch with their families, online stores to shop for them, and remittance services to send them money. The U.S.-Nigeria remittance corridor alone generated over $5 billion in 2015, and according to remittance expert Adams Bodomo, the global African remittance market could be as high as $140 billion, as about 75% of all transfers are informal. These consumer habits will ultimately translate into significant investment opportunities for U.S.-based investors.
Africa has emerged in recent years as the world’s leader in global entrepreneurship, taking many investors by surprise and prompting analysts to place the continent at a crossroads. Many indicators are now revealing that Africa’s tech scene is actually moving faster than expected and that entrepreneurs and investors alike are already turning its many secrets into significant business opportunities.
Africa is not at a crossroads anymore. It has already crossed over.