Africa's Tech Sector Thriving: Opportunities and Challenges

Africaâs tech scene has witnessed an explosion of growth with start-ups springing up across the continent. CNBC Africa is joined by Allen Taylor, Managing Partner, Endeavor Catalyst for more. Speaking about the bullishness that you've just highlighted, which are the key markets you're seeing a lot of funding coming through, and where do you see significant opportunity among those countries in terms of the big four markets? Yeah, look, we have about 30 investments total today on the African continent. That's as Endeavor Catalyst, which is a growth stage, series A, B, and C venture capital fund. The four main places we're investing are here in Nairobi, Kenya, where I'm visiting today. So Kenya, Egypt, Nigeria, and South Africa. So those four hubs. But we've also done well venture investing in markets like Morocco and Tunisia. And truly, there's lots of opportunity everywhere. Speaking about the opportunities, I'm just curious to know, what is the size of the venture capital opportunity for Africa, and which areas are you seeing a lot of excitement and channeling of funds to across the financial system? Well, look, the size is quite large. We run $500 million of AUM as our fund with Endeavor Catalyst. But I'm here today, visiting Nairobi as part of the Kauffman Fellows Global. Altogether, we have 300 venture here in Nairobi, many of whom I think 70% are here in Africa for the first time. And they represent $300 billion of AUM. So we're here because the opportunities are very, very big over the next 10 or 15 years. And while a lot of the attention in the first few years, in the last few years, I should say, has been on fintech, we believe it's about much more than that. Some of our more recent investments here in Kenya, for example, are in businesses like Apollo Agriculture and Victory Farms. That's in bringing technology to the agriculture and food sector. But there's opportunities in healthcare and education and enterprise software. And so while fintech will continue to grab headlines, and we'll have some very exciting years, are much more than that. Amazing. And I'm just curious to pick your mind. Out of this Venture Capitalist Summit, what are some of the key outcomes that we should anticipate, as well as what will be the biggest deal on the table that you look to close? Look, the real purpose of it is to bring more smart capital. So, you know, we run every year, the last 13 years, everywhere from Tokyo to Mexico City, to Silicon Valley, to London, right? This is the first time ever we're hosting it here on the African continent. And the outcomes we would expect are that over the next one, two, three years, you'll see more international venture capital and growth equity funds actually make their first investments in Africa. What we've learned about this morning is there's a thriving ecosystem already in markets like Kenya and Nigeria and South Africa of local venture funds and local investors investing at the early stages. Partnerships will come in with more funds like ours is at that later stage as companies really start to scale up and grow, where the international funds can bring particular sector and stage-based expertise to the companies. It's about a lot more than just money. It's about the knowledge, the know-how, the skills, and the people that come with the money. That's why we call it smart, connected capital. So what are some of the risks that you've already seen across the various VC markets that you're eyeing across Africa, considering that we've also seen a high failure rate of early-stage startups in Africa? Yeah, look, the risks are many. And I think it's important to talk about what exactly we're doing, which is this and building new things. In fact, the entrepreneur is taking the biggest and bold ones, often the ones that attract most capital, both human capital and venture dollars. But these things will not all work. So I live in Silicon Valley. The fund we've made globally, we've made more than 300 investments now all over the world. But these things can fail, and they do fail sometimes. And I think it's important going in for the sector and the society as a whole to understand the economy where we are taking risks and we're trying new things. And in fact, in many cases in our own portfolio, about 20% of the entrepreneurs we've backed are entrepreneurs who had previous companies that did fail. And we went on to back them in the next company or the company after, because we believe that's actually part of how you do this, is you have to try new things that didn't exist before. The entrepreneurs are really the ones imagining the future. We're just here to help. All right. And in closing, just curious to hear from you, going forward, which are the major sectors outside fintech that you see potential for Africa? And how will this impact on the various economies across the different markets that you're eyeing? Yeah, look, I think technology is going to come to disrupt and enable most of the largest technologies. We had U.S. Ambassador Meg Whitman here with us at the summit talking about the opportunities in renewable energy and in technology related to climate change. I think that's going to be a huge sector where Kenya and Africa can actually lead globally. So I think that's a really interesting one to look at. I mentioned some of the opportunities in agritech and agriculture, but I think there'll be more, right? If you think about education, healthcare, technology really coming to both disrupt and enable all parts of the economy. Our fund is really even going where the opportunity. And I think over the next decade, you're going to see that everywhere in the economy.

Africa’s tech scene has witnessed an explosion of growth with start-ups springing up across the continent. CNBC Africa is joined by Allen Taylor, Managing Partner, Endeavor Catalyst for more. 

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