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Appfrica is a firm founded in 2008 in Kampala, Uganda which helps the worlds leading multinational organizations and technology firms enter African markets. Appfrica offers creative program design, market research and technical solutions, in addition to offering regional talent and support in over 16 Sub-Saharan African countries.We are the founders of the Apps4Africa Acceleration program which invests in Africas next generation of great companies.

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8 trends and lessons for the future of tech in Africa

Jan 17, 2014

By Mark Kaigwa on January 17, 2014 Tweet   This article by Mark Kaigwa was originally published by  APPFRICA and is published with permission. Last year, 40 top innovators from all across Africa  launched their products at DEMO Africa 2013 . Let’s look at 8 lessons we can take from DEMO Africa 2013 as we seek to understand trends and insights for 2014. 1. The Changing Face of Tech Financing In Africa The 40 finalists at DEMO Africa 2013 represented all corners of the continent. The benefit of reviewing the asks of each of the companies gives us context of comparing for any similarities or differences to their predecessors in 2012. Consequently, the categories and ranges of sums of investment proved similarities. Those finalists that chose to explicitly declare how much funding they had raised and what they were searching for ranged between $30,000 and $10,000,000. When it came to the finalists, the majority were in the bootstrapping phase having involved seed capital by means of savings and personal investments. Interestingly, a fraction of them choosing to match this with grants and taking on venture funding to scale. In the cases where the lines between enterprise and social enterprise become less distinct we find some foundations and non-profit institutions taking to giving grants or in some cases investments for the pilot phase. OTGPlaya ,  RemoteCycle ,  Fairwaves ,  Duma  among others being some examples of this trend. This combination of grant funding and angel investing marks a key point in the African entrepreneur journey. Navigating the challenges of sources of capital and the philosophical questions around committing for a pilot/proof of concept to be non-profit in this discovery phase and transitioning to for-profit or sustainable enterprise soon after. Whether this raises some issues around transparency of intent along the startup’s life cycle remains to be seen. How much institutional investors get clarity on the source of original funding and any legal consequences for them is another question begging to be explored. Questions around crowdfunding on the African subcontinent are also still pending in this discussion. This would be accelerated by mobile money’s advancement in key economies. Its maturity in Kenya and growth in Nigeria not to mention the mobile network operators aiming to turn the idea of Pan-African mobile money service into more than a gimmick. Is there is room for a Kickstarter of (and for? ) Africa just yet or is our ambition better met out by a Kenyan/Nigerian/South African alternative of which there are several contenders? 2. Ushering in the Second Age of the African Technology Hub Hubs, labs and accelerators across the continent have picked up over the last 3 years. From the  iHub  in Nairobi,  ActivSpaces  in Cameroon and Bantalabs among the first ones to well over 100 now all across the continent according to the famed Africa Hubs map by the team at  Bongohive  in Lusaka. 2014 will be a big test in the model for Nairobi specifically as the dynamics that play in the ecosystem of generating startups and cultivating entrepreneurs becomes clearer. DEMO Africa was an opportunity to look to see any correlations between the finalists and the respective rise of technology hubs in a host of African cities. Though hard to draw a conclusive causal case for the technology hubs from the finalists, ties were evident with the use of space, connections and dissemination of information to the startups. 3. Art of the Start: Pan-African Ambition vs. World Ambition on an African Stage Kwame Nkrumah said “Africa is one continent, one people, and one nation.” And yet the ambition for today’s African technology startups has been something questioned time and time again. Despite borders, language and geography amongst the list of complexities, there’s the assurances the internet and the mobile phone continue to make in a case for “digital PanAfricanism” and adding a currency to the late Ghanaian leader’s words. This year’s DEMO Africa gathering confirmed that startups still took the challenge of demonstrating success at a local and micro-level in the cities, townships and capitals seriously. Phrases and notable diagrams typical of today’s lean startup a part of the founders’ vocabulary. Nevertheless there were those who took to the internet to bring the next customer – whether behind an iPad in Honolulu or by a chalet in the Swiss Alps. There was  Zehoo  getting into cloud computing by serving up a single search engine for one’s different cloud storage of e-mail, documents and attachments. GMobile’s  look at the Kenyan Diaspora and their propensity for calling the continent connected with their remittances meant he’d uncovered a strong value proposition for connecting them and their loved ones at a fraction of the price of competing services. 2014′s African tech startup will need to look deep and wide, wrestling with questions of locality and perhaps hyperlocality with solving problems in cyberspace that could lead to a multitude of Africans signing up and signing in. 4. Social Media in Africa – less Snapchat, more Salesforce? MXit  has long been one of the continent’s leading stories for social networking. The South African juggernaut of mobile and social pioneering an age of instant-messaging and growing in emerging economies across the world. A fantastic story complete with the garage and long-haired jean-wearing hustle days and the corporate boardroom takeovers of today. But as the likes of Facebook, Whatsapp and more global social and messaging convergence takes place, the face of social media and social networking adapts in Africa. Facebook recently  surpassed MXit  in South Africa as their largest social network with 9,4m active users to MXit’s 7,4m. That said for the social-oriented startups at DEMO Africa 2013 it was interesting to pick up on them choosing to bring social into specific workplace and personal scenarios rather than creating an all-encompassing African social network. Notable examples being  Eventtus  with events,  Jooist  and  ChopUp  with games and  Famissima  for mothers and families. Each one taking on a set target audience and sure not to compete with Facebook which is fast taking over the continent as the social network of choice with close to 50 million on the social network today. The next iteration of social startups on the continent are set to pick and attempt to dominate verticals: gaming, family, jobs, small business and television (as witnessed by DEMO Africa alumni  Djoss.tv ) among others. 5. Gaming, gaming wherefore art thou, gaming? The past few years have seen a steady rise in sexy African gaming startups. The winner of Pivot East 2012 was  Ma3Racer  – a minibus taxi racing game. One of the big winners who went on to wow at DEMO after winning in the inaugural event last year was Nigeria’s  Maliyo Games . This year as well at Pivot East, we saw that Uganda’s  Kola Studios  was one of the winners with their Matatucard game. And yet, with all this momentum in African gaming there wasn’t a single gaming company featured in the line-up of the 40. Gaming was a part or extension of several of this year’s finalists present but no out-and-out gaming startup present. It may have been a phase but perhaps the leisure market and content including how long it takes to scale is seeing more startups go for those untested and uncharted waters more. 5. No e-commerce, a tell-tale sign? E-commerce also didn’t feature last DEMO Africa. It’s been a busy year in the race to be the continent’s digital shop of choice. Whether you look at  Jumia  in West Africa,  Rupu  in East Africa and  Kalahari  from South Africa, the amount of money being invested and growth rates for companies in e-commerce is enough to show big bets are being made. MIH Africa, Ringier and Rocket Internet taking each other to task as the race heats up. Looks like deep pockets count for a lot in this game too. A large exit or significant liquidity event on the continent is still pending amidst much of the hype of the consumer technology potential. That’s not stopping some interesting news and activity to lead us to believe an African marketplace play will succeed – or a group of marketplace companies together. One Africa Media  being an example of this could be set to be one of the ones to watch in 2014. For the DEMO companies, an exit via acqui-hire with  Spark , MIH, Ringier, Rocket or other investors might not be a bad place to aim for. 2014 would be a good time to see the shift from the fight for the market to finding technology talent and see some M&A activity too. 6. The Diaspora: Talent, Audience and Finance The African diaspora of 30.6m according to the Brookings Institute spread across the world sent over  $51.8bn to Africa  in 2010. The growth of “reaspora” through brain gain is another bonus. The affectionate term for members of the diaspora who are returning and getting into business, the marketplace and service in their home countries. DEMO Africa exhibited founders who could be categorised by this, having lived, worked and studied abroad and having returned to form ventures that made it to the finals. In other cases international citizens traversing the world ending up mixing global perspective and experience with their local counterparts’ insights to make for formidable teams. Eduze ,  Karibu Solar  and  Save and Buy  among other examples of this. The Diaspora also prove a strong potential audience with their affinity for technology and disposable income. They form part of  ChamaSoft’s  secondary audience attempting to bring transparency to savings clubs and groups – which often include members of the diaspora in their target market, Kenya. 7. Hardware made in Africa, For the World One of the most interesting aspects from DEMO Africa 2013 was in the hardware category. The mixing and matching of Africa’s challenges and needs with entrepreneurs who thought of hardware, software and variations of both made for interesting viewing. Arguably the most eye-catching example of this was  ViviFi . The Egyptian startup using their patented technology to turn any wall or surface into a touchscreen computer with the help of a WiFi connection. Their unique sticker technology means you could choose to switch off your lights by pressing a part of a brick wall or turning part of the wall into a screen to scroll through goods at a store. A myriad of applications in the real-world and with some of the continent’s limitations. Fairwaves  chose to democratise the telecommunications sector with low-cost base stations powered by open-source technology. By changing the audience from the large centralised telecoms companies to allowing smaller villages and municipalities to take their connectivity into their hands they open up a new business segment for themselves. Changing the price too meant innovating around minimal power consumption and building an architecture that sacrificed on sophistication but could connect much of the interior of the continent bringing in the first wave of GSM connectivity. However, overcoming regulation for spectrum still presents a hurdle for them but it’s not an insurmountable one with the connections they made at the DEMO 2013. Also happens that this finalist had Russian founders, making technology for the continent and beyond. 8. Content is King – Delivery and Payment Remain the Empire Africa’s next generation of content creators are born rising through the established channels – Youtube, Facebook, Twitter, Tumblr, WordPress and the web at large. However even for them to fully realise success there are a number of challenges around getting content in front of an audience that mean the value chain isn’t complete. Content delivery is still a incomplete piece of the puzzle. Telecommunications companies are noticing the chance to rewrite the path they’re set on to derive value from content rather than ending up as defined in the “ dumb pipe paradox .” While their own app stores, music marketplaces and mobile TV partnerships take place there’s still plenty of room for players to add value to a growing audience. Eduze’s technology for example has seen them create hardware that incorporates a server, router and content delivery network in what they call CLOX or the cloud in a box. Giving a local connection to cached content they are aiming to bring an in-flight entertainment experience to taxis, locations and retail. With sponsored content as well as reimaginging broadcast and radio advertising for the digital age they hope to provide more accessible content and better value for brands to reach the connected audience. Conclusion Overall DEMO Africa 2013 proved through the startups present and by those absent that the African continent that 2014 is set to be a year of discovery, surprise and disruption. The best is yet to come and with the kind of ambition of the finalists and the 300 who were shortlisted, this won’t be the last we write of many of them. Also check out the  DEMO Africa 2013 videos  on Youtube! Mark Kaigwa is an entrepreneur and digital strategist based in Nairobi, Kenya. He blogs at www.mark.co.ke and can be found on Twitter as @MKaigwa .

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