Tech in Africa in the COVID Era
written BY Kelly Costello / PHOTOGRAPHY Provided by MEST Africa
SHACK15 aspires to be a global hub for entrepreneurs and startups that reaches beyond our physical home in San Francisco. We are passionate about connecting like-minded entrepreneurs from around the world, and particularly excited about the potential that Africa holds for the future of tech as the continent comes off of a record-breaking investment boom in 2019. We’re excited to share another SHACK15 Partner Spotlight and highlight our partner MEST, an Africa-wide non-profit entrepreneurial training program, seed fund, tech incubator and hub for African entrepreneurs building world-class tech companies.
Founded in Accra, Ghana in 2008, MEST was built on the notion that there is an incredible amount of untapped talent on the continent, and with the right support and guidance, the next globally successful tech companies can come out of Africa. MEST provides critical skills training, funding, and support in software development, business, and communications to the next generation of Africa’s tech entrepreneurs. MEST has trained over 500 entrepreneurs since its inception, currently provides incubation for 50+ active portfolio companies and brings together a community of leading entrepreneurs, investors, corporate partners and ecosystem players across Africa. MEST has been recognized by Fast Company as one of the “Top 10 Most Innovative Companies in Africa” and is regularly featured CNN, Forbes, TechCrunch and other international media.
We spoke to MEST Managing Director Ashwin Ravichandran about his view of the current startup landscape, funding and what COVID-19 means for innovation on the continent.
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Africa’s largest tech ecosystems are coming off of a record-breaking investment boom, crossing the two-billion dollar mark in 2019. Now, in the wake of COVID-19 what is the landscape looking like?
While the landscape does look a bit blurry right now, I am optimistic. When we look at the nature of the tech ecosystem on the continent, it’s helpful to think about it as three verticals: opportunity, talent and scale. Due to COVID, an immense range of opportunities are opening around digital transactions, more peer to peer logistics, the rise of social commerce, etc; and talent is also getting ready to adapt to the new norms in terms of going digital, working on smaller projects, and working from home. However the scale of these opportunities is unclear, as well as how long these changes will last. But I’m optimistic that talent will take on the opportunities at hand to create tech that can solve some of the challenges we are facing.
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What are the trends you’re seeing with regard to investment on the continent?
I’m noticing there are a couple of distinct trends emerging:
Traditional investors are starting to observe the digital space.
A recent conversation with a top financial trader in Ghana made me realize that most of his clients are asking how they can invest in fintech, social and other digital platforms. Fintech and platforms focused on financial inclusion continue to hold a large piece of the investment sector, with mobile money, online payment processing, lending, and investing startups aiming to plug the gaps that exist in local financial service industries and support the next generation of Africans participating in local and global economies.
Rise of low contact, high touch technology businesses.
With concerns about COVID influencing businesses in nearly all industries, we’re seeing innovations to reduce contact and shift digital. Instead of going to the supermarket, supermarkets are offering aggregators a chance to sell their products on their platform providing their products to a wider range of consumers. Similarly, banks are now focusing on digital collection platforms to collect cash from their customers.
Imminent rise in agriculture-tech.
Most African countries used to depend on import. Now, with COVID, much of this has stopped. A large number of small SME agricultural companies are now blooming more than ever and are able to provide large amounts of support to local farmers and the population.
What advice would you give to founders looking for funding in this landscape ?
- Hire for your top line. Spend time hiring your executive board and leadership to drive your company forward.
- Spend time getting to know your early hires. Understand what motivates them. They’ll be spending time, sweat and money on your business, so the least you can do is spend time with them.
- Educate investors on your market. Don’t expect the investors you approach to have the same industry knowledge you do. Be prepared with information to help them understand your market opportunity.
- Understand your ROI. Investors want to invest in companies that are going to make them money. Present your company in a way that shows them you have a plan to pay them back.
- Have a culturally relevant value proposition. Make sure that what you’re building is really necessary and solves a problem in your new market, and that people will want to use it.
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How are new funds on the continent unlocking investment opportunities?
As it turns out, some support may come from within the continent as more homegrown venture funds with a nuanced understanding of local realities emerge. One of those is the Future Africa Collective which launched earlier this year to create new and more sustainable funding sources, especially for companies at the earliest stages. This creates a really interesting opportunity for younger investors and others who haven’t traditionally had access to investment opportunities to get involved and be a part of the solution to support the ecosystem in this time of uncertainty.
How do you think investors and entrepreneurs in Silicon Valley and/or Europe can help African startups?
I think it is important to build awareness around the talent and opportunity that lies in the continent. A lot of people globally still associate Africa with negative connotations. If more investors and entrepreneurs take the time to learn more about the vibrant startup community across Africa, and travel (in a COVID-free world!) to visit the startup hubs and interact with talent there, it will only attract more interest globally. Remember, opportunity can only be seen when you immerse with them in understanding the opportunity and most importantly user behavior.
A couple of years ago when the Chan Zuckerberg Initiative announced a large investment in Nigeria, it was a great boost for the entire continent as more people were suddenly interested in what was going on in Africa. At the moment, the local startups here can use all the support they can get, whether it’s investment, mentorship or just a casual conversation.
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Thanks so much Ashwin for sharing your insights with us! Make sure to check out the MEST website and follow them on social media to stay up-to-date on their growth on the continent.
Stay tuned for more SHACK15 Partner Spotlights in the future, where we highlight the great work being done by our network of partners around the world!