As we approach the end of the first month of the new year, we're excited to return to your inbox with weekly briefs, providing news analysis on events in the African tech ecosystem.
In 2023, African startups secured $2 billion in (mostly equity) funding, marking a 43% decrease compared to the previous year's $3.3 billion. While this may appear as a downturn, it signifies a maturing ecosystem that emphasizes quality over quantity.
The "Big Four" markets in Africa—Nigeria, Egypt, Kenya, and South Africa—maintained their status as leading investment destinations. Interestingly, Ghana yielded its fifth-ranked position to the DRC Congo, this reflects the potential for new tech hubs to emerge on the continent.
Stay tuned later this week for more insights as we unveil our "State of Tech VC Funding in Africa" report.
Inside today's letter, we explored:
- The launch of Accelerate Africa by Iyin Aboyeji and Koschitzky-Kimani
- Amazon's plan to scale down Prime in Africa and the Middle East
- Tech trends that will shape 2024, according to three African investors
We also covered other noteworthy information including the latest African tech startup deals, opportunities, interesting reads, and more.
The big three!
#1. Why Iyin Aboyeji wants to build the "YC of Africa"
The news: Last week, Iyin Aboyeji, the founder of Future Africa, a Pan-African VC firm, along with Mia von Koschitzky-Kimani, a general partner at the firm, announced the launch of Accelerate Africa, a fully-fledged accelerator programme aspiring to be the 'Y Combinator (YC) of Africa'.
"For a long time, I told anyone who cared to listen that the YC of Africa is YC and there was no need for an African accelerator. I've changed my mind," Aboyeji said. "Prior to now, we have mostly run successful pre-accelerator programs to help get founders into actual accelerator programs like YC and Techstars. Now we are getting into the accelerator arena ourselves."
Accelerate Africa is starting with a $750,000 USAID grant.
Why it matters: According to Aboyeji, "With rising interest rates...global venture capital appetite for African innovation and entrepreneurship has drastically reduced and with it the interest of most global accelerators like YC in investing in African startups."
In 2023, Y Combinator's investment in Africa declined by 81% YoY. Only six African startups were selected for its biannual accelerator last year, the lowest record since 2018.
While other global accelerators like Techstars are increasing their support for African startups, the ex-co-founder of Flutterwave and Andela thinks it's time for Africa to go its way, free from Silicon Valley's templates, as he believes "Africa has come of age".
"This is why we are building Accelerate Africa - to accelerate bold and visionary founders building global businesses to solve Africa’s biggest challenges," he added.
Zoom in: In every cohort, Accelerate Africa will welcome 10 startups, providing them with pre-seed or seed-stage funding ranging from $250,000 to $500,000. Application for the inaugural cohort is currently open.
Lagos Tech Fest is returning for its 4th edition in February
Join Ife Durosimi-Etti, Oyin Solebo, Jude Dike, Kehinde Olateru and other tech leaders at the Lagos Tech Fest event at Landmark Event Center, Lagos on February 15, 2024. The Lagos Tech Fest brings together entrepreneurs, disruptors, innovators, investors, venture capitalists, and tech enthusiasts.
#2. Amazon Prime cuts funding and staff in Africa
The news: Within just a year of debuting its first African Original, Amazon Prime Video, the American streaming service, is reportedly tightening its budget and conducting staff layoffs within its teams in Africa and the Middle East.
Despite the initial intention to "create premium content that will attract all African storytellers, crews, and talent," the latest measures include the suspension of local original productions. Last year, the service premiered its first two African originals; Gangs of Lagos and Last One Laughing in Naija.
However, the service will still premiere LOL ZA, Ebuka Turns Up Africa and Garri and Water, three African originals it recently commissioned, later this year.
It is important to note that Amazon Prime Video will maintain its presence in both regions and continue to upload non-original movies.
Know more: According to Variety, a Los Angeles-based publication, Prime Video is undergoing a restructuring of its international business, shifting its focus to European originals.
Prime Video’s VP & GM for EMEA, Barry Furlong, said that the restructuring intends to "prioritise resources on what matters most to customers...rebalance and pivot resources to focus on the areas that drive the highest impact and long-term success."
Zoom in: Several Nigerian film producers and analysts have blamed Prime Video's withdrawal on its lack of understanding of the African streaming market.
According to Anita Eboigbe, co-founder of In Nollywood, a publication covering the Nigerian movie industry, "Amazon Prime has been largely unserious in the Nigerian (and African) market...They approached the market like the audience would simply jump on stuff for whatever reason. You almost had to beg them to market their projects."
In the African market, Prime Video is the third-largest streaming service, trailing behind Netflix and Showmax. According to projections from Digital TV Research, a market intelligence firm specialising in streaming platforms, Prime Video, which currently has around 600,000 subscribers, is expected to experience significant growth, reaching 3.14 million subscribers by 2029.
However, its plan to scale back on the continent will affect this projection.
#3. Tech trends that will shape Africa in 2024
Start here: Six out of the seven predictions we tracked last year came to fruition. To kick start the new year, we curated five tech trends that will define African tech VC investments in 2024 from three African-focused investors—Efayomi Carr, Principal at Flourish; Basil Moftah, General Partner at Nclude; and Zachariah George, Managing Partner at Launch Africa Ventures.
- Increased cleantech financing: "The surge in climate finance is a noteworthy development, with substantial capital earmarked for deployment in the African energy sector. Sectors like renewables are expected to draw substantial investments, attracting innovation-driven funding," Carr said.
- Growing adoption of AI in Africa: Carr, Principal at Flourish also predicts that the adoption of artificial intelligence will grow in the African market. He said, "While AI has already demonstrated its transformative impact on startups in established markets like the US, its influence is anticipated to grow significantly within the African context.
- The path to profitability: Although businesses often require capital injections for growth, they needis to articulate a clear path to profitability. Moftah says "Investors are likely to enforce more stringent criteria to ensure this trajectory. This reflects a growing emphasis on sustainable financial models."
- ESG will take the front row: Moftah also suggests that environmental, social, and corporate governance (ESG) will be at the forefront. He notes, "The days of investors simply writing checks and hoping for the best are dwindling. Governance, in particular, has become a pivotal point of consideration for investors worldwide."
- Partnership with corporations... and M&A: According to George, "M&A will significantly expand as [big startups]... [look to] increase their market share. This will be a great trend because more M&A means there are exit opportunities for investors." Moftah also predicts increased consolidation: "Companies either closing their operations or being acquired by their competitors. This trend, particularly in the fintech sector, holds the promise of weeding out redundant ideas and driving greater scalability," he said.
💰 State of Funding in Africa
African startups raised at least $18.3 million last week. The funding was dominated by Egyptian startups operating in fintech, autotech and healthtech.
- Ezdehar, an Egyptian firm, invested $10 million in Yodawy, acquiring a minority stake in the health tech.
- Zeal, an Egypt-based fintech and customer loyalty app, closed a $4 million funding round led by Raed Ventures and Cur8 Capital.
- Nigerian Web3 neobank, Canza Finance raised $2.3 million in a round led by Polychain Capital. This brings its total funding to about $5.5 million since it was launched in 2020.
- Egyptian autotech FriendyM secured a $2 million investment from undisclosed investors. The startup which operates in MENA, will use the funding to expand across Egypt.
- KOKO, a Kenya-based cleantech raised an undisclosed amount of funding from Rand Merchant Bank.
Here are other important stories in the media:
- Cell C isn't laying off staff: Despite media reports that Cell C, one of South Africa's top telecoms operators, is laying off part of its workforce, the telco told Bendada.com that it is not part of its current growth strategy.
- Cardoso's debut CBN MPC meeting scheduled for February: Olayemi Cardoso is scheduled to chair his first monetary policy meeting as the CBN governor in February, as indicated by a tentative calendar released by the Bank. This comes after he postponed two of the meetings last year.
- Five things that made Tyme Bank profitable in 2023: With 8.5 million users, TymeBank became profitable last month. Last week, the South African neobank disclosed how it overturned months of losses amounting to $45 million.
- What we know about UNDP-backed $1 billion innovation fund for Africa: Over the next decade, The United Nations Development Programme (UNDP)'s timbuktoo Initiative intends to invest in African startups in specific sectors across eight cities on the continent.
- How Spotify helped turn Afrobeats into a global phenomenon: Damilare Dosunmu writes on how the Swedish music giant is pushing to make Africa’s biggest sound the world’s favourite sound.
We carefully curate open opportunities in Product & Design, Data & Engineering, and Admin & Growth every week.
Product & Design
- Sendstack — Brand/Graphic Designer, Remote
- Kuda — Senior Product Manager, Lagos (Hybrid)
- MTN — UI/UX Design Manager, Lagos
Data & Engineering
- AGRA — Data Analyst, Nairobi
- MTN Nigeria — Software Developer, Lagos
- Palmpay — Software Engineer, Lagos
Admin & Growth
- Sendstack — Brand/Marketing Associate, Remote
- Norrsken House Kigali — Managing Director for East Africa
- Ebanx — Treasury Specialist, Africa
- For African founders: Applications are open for the Accelerate Africa accelerator for startups on the continent. Deadline: February 16.