Silicon Valley Loses Out on Africa Startups, TechCrunch SaysBy
African companies received $129 million funding last year
Lori Systems awarded $25,000 from TechCrunch contest
Silicon Valley is ignoring Africa’s startup scene, passing up an opportunity to invest in creating innovative technology-based businesses on the continent, according to TechCrunch Inc.
“Silicon Valley does not understand the context of Africa, so we see it as an opportunity to fill the gap,” Edward Desmond, chief operating officer at the Verizon Communications Inc. unit, said in an interview Wednesday in the Kenyan capital, Nairobi. “The outside world that is very powerful does not know the innovation and possibilities available.”
African startups raised an estimated $129 million in 2016, according to Disrupt Africa, an African startup information portal. China alone attracted $31 billion in venture capital last year, while the U.S. received $69.1 billion, according to KPMG International’s Venture Pulse report.
Desmond was in Kenya for TechCrunch Battlefield Africa, its first startup pitching event on the continent in the competition’s decade-long history. Competitions by the San Francisco-based technology media property company help early stage enterprises with exposure and to find financing from global investors.
“We are here to connect the money guys around the world with opportunities here,” Desmond said.
Companies that have participated, including Dropbox Inc., have gone on to raise $7 billion in funding since 2007, according to Desmond.
At TechCrunch’s Facebook Inc.-backed Africa event this week, 15 companies shortlisted from an initial 700 that sought funding were in the running for $25,000 prize money. The winner was Lori Systems, which also got the chance to compete at TechCrunch’s Disrupt SF in San Francisco next year.
Lori provides a technology platform that connects truck owners to customers needing haulage, much like Uber Inc.’s system links passengers with taxi drivers. Logistics and infrastructure development offer “endless” opportunities for startups, Desmond said.
Opportunities also lie in agriculture and fintech, sectors in which Village Capital has made 14 investments in sub-Saharan Africa, investing between $25,000 and $50,000 in either debt, equity or convertible debt, according to Adedana Ashebir, Africa regional manager at the Washington-based venture capital company.
“Local capital, diaspora capital and peer selection by entrepreneurs are key to bridging funding gaps,” Ashebir said in an interview. “These groups need to understand the ecosystem, markets and the risks involved.”