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Africa Tech Trends: Cash flowing in for start-ups; Uber’s Kenyan safari

Africa Tech Trends is a fortnightly column by Tom Jackson. It focuses on the most important developments in Africa’s technology industry and looks at how technology is changing the way business is being done on the continent.Uberlogo_200x240

Cash flowing in for tech start-ups

African tech start-ups may well be casting an envious eye at their counterparts in Silicon Valley, for whom 2014 was a year to remember. According to the quarterly MoneyTree Report, issued by PwC and the National Venture Capital Association (NVCA), VC companies poured US$48.3bn into US start-ups last year.

That it was the best year on record since the dot-com bubble burst in 2001 is reiterated elsewhere, with the CBInsights US Venture Capital Year in Review 2014 putting the figure at $47.3bn across 3,617 deals. You could forgive African start-ups for thinking of packing their bags and heading stateside.

No need, however. For VC funding is finally arriving at Africa’s shores. I wrote in this column in December on the emerging trend of African mobile operators investing in the new generation of start-ups. This trend continued this month with the launch of the Orange Digital Ventures programme. But VC funding is flowing into tech start-ups from other sources too.

VC4Africa’s latest Venture Finance in Africa report is positive enough, saying total capital investment in African start-ups more than doubled to $26.9m in 2014. But this only applied to VC4Africa-listed companies. The last few weeks have seen a number of sizeable investments in African companies suggesting 2015 should be an even better year.

In the last two weeks alone, Tanzanian edutainment start-up Ubongo received $75,000 in funding; GPS navigation and wireless device company Garmin acquired South Africa’s iKubu; and Orange invested in cash-to-goods money transfer start-up Afrimarket. Even bigger and better deals should follow.

The solar industry too has a bright future

Africa as a continent has a history of leap-frogging certain technologies, and this is proving to be the case when it comes to power. With so few people on the continent connected to an electricity grid, there is an increasing move towards employing solar to power homes and businesses. And this is proving attractive to both entrepreneurs and investors.

South Africa leads the way, with Wiki-Solar last year reporting the country had become one of the top 10 in the world for solar energy use. But the trend is evident elsewhere, with East Africa also active in the field.

Kenyan start-up M-KOPA Solar this month became the first company from sub-Saharan Africa to be recognised by the Zayed Future Energy Prize for its ‘pay-as-you-go’ energy services for off-grid customers. Uganda’s SolarNow has also secured $3m in investment. It sells solar systems to rural households and businesses on credit in order to make alternative energy more affordable. Another growing solar provider is Tanzania’s Off Grid Electric, which received funding of $16m in December.

International and local investors are increasingly sensing the opportunity, with the US-Africa Clean Energy Finance (ACEF) initiative and companies from Dubai and France also looking to invest. African solar power and the businesses that provide it are set for a bright future.

Uber landing in Kenya

The arrival of Uber was a turning point for South Africa’s taxi hailing app industry, with Zapacab subsequently going out of business and only Snappcab remaining. But it was just the first part of an African journey for the international behemoth which now operates in more than 220 cities worldwide.

Uber shows no signs of slowing down. It made Nigeria its second African market last year, and has now launched in Kenya. And anyone wondering if the global phenomenon would struggle to adapt to Africa has been rudely awakened. In Kenya, the company is exploring the possibility of integrating its app with the hugely popular M-Pesa mobile payment service, already used by 19 million Kenyans. Like it or not, it isn’t going away and looks set to dominate the industry across Africa within a relatively short period of time.

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