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African tech space attracts $2.4bn investment in 2020 despite COVID-19
African technology start-ups attracted $2.4 billion in 2020 despite a downturn in Africa’s economy at the height of the novel Coronavirus pandemic, which has hit businesses and brought many activities to a halt. This is according to the report by Briter Bridges, a data firm. Fintech and solar companies attracted the biggest share of investment. Dario Guiliani, Director of Briter Bridges joins CNBC Africa for more.
Wed, 20 Jan 2021 14:50:09 GMT
Disclaimer: The following content is generated automatically by a GPT AI and may not be accurate. To verify the details, please watch the video
AI Generated Summary
- The significant increase in financial capital availability has fueled the growth of African tech startups and SMEs, supported by enhanced transparency and media coverage.
- The consolidation within the tech ecosystem, marked by a rise in mergers and acquisitions and diversification of early-stage support structures, has contributed to the sector's resilience.
- The dominance of the clean energy and FinTech sectors underscores the innovative financial models and government collaboration driving investments in sustainable tech solutions.
In a surprising turn of events, the African technology startup sector managed to secure an impressive $2.4 billion in investments during 2020, a year marked by the devastating effects of the COVID-19 pandemic. This remarkable feat was revealed in a report by Briter Bridges, a data firm specializing in tracking investment equity across the African continent. The report highlighted that FinTech and solar companies were the primary recipients of these investments, signaling a promising trend in the region's tech ecosystem. During a recent interview with CNBC Africa, Dario Guiliani, Director of Briter Bridges, shed light on some key insights gleaned from the report. Guiliani elaborated on several crucial points that underscore the growth and resilience of the African tech space amidst the challenging economic landscape. One of the standout observations was the substantial increase in financial capital availability for entrepreneurs, SMEs, and startups over the past half-decade. This growth, as Guiliani pointed out, was not merely perceived but backed by tangible data and a rise in tech news coverage by media outlets like CNBC Africa. The increased transparency and information sharing facilitated by this media coverage have played a pivotal role in enhancing the accessibility of African tech activities to a global audience. Another significant trend highlighted in the report was the consolidation within the tech ecosystem, evident in the surge of mergers and acquisitions in recent years. With over a billion dollars invested in acquisitions, foreign companies entering the African market and local firms acquiring smaller players have contributed to this consolidation. Moreover, Guiliani emphasized the diversification of the early-stage support ecosystem, comprising venture builders, angel investors, accelerators, and foundations, which have collectively provided invaluable resources and support to African entrepreneurs. When asked about the performance of the East Africa region, Guiliani noted the emergence of key innovation hubs like Kenya and Rwanda within the African tech landscape. Kenya, in particular, has garnered significant attention as a key recipient of tech funding, with Nairobi evolving into a burgeoning tech hub attracting foreign investors and corporate entities. The conducive business environment and robust ICT infrastructure in East Africa have positioned the region as a prime destination for tech investments and international expansion opportunities. Clean energy and FinTech sectors have emerged as dominant forces in the African tech investment landscape, driven by innovative financial models and increasing government support for clean energy initiatives. The pay-as-you-go model and asset financing options have made clean energy solutions more accessible, especially for underserved communities. Additionally, the collaboration between public and private sectors, facilitated by startups and tech companies, has accelerated the adoption of clean energy technologies across Africa. Looking ahead to 2021, Guiliani expressed optimism for the clean energy sector, anticipating a surge in large-scale deals and investments. The trend towards consolidation in the clean tech space is expected to continue, with a growing interest from impact investors, private equity firms, and corporate entities. Overall, the outlook for African tech startups appears promising, with an increasing focus on sustainable and innovative solutions driving growth and investment in the sector.
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