Africa's startups are ready for investment

The founders of the Baobab network
Tom Fairburn
The Baobab Network
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Over the past year, we have spent time working on the ground in Africa with some of the continent’s most exciting early stage tech companies, with a focus on startups in the ag-tech, healthcare, finance and education sectors.

Quite simply, we have been blown away by some of the innovations; unearthing products that have the potential to disrupt markets not just in their own country, but across Africa and around the world.

The most exciting aspect of the start-ups we have worked with in Africa is their ability to scale and generate revenue and value economically.

Sub-Saharan Africa is one of the most challenging environments in the world to start, and scale, a new business. Funding is hard to come by, infrastructure is still very underdeveloped and access to the right talent can still be difficult to find.

Despite the tough climate, entrepreneurs in countries all over the region are starting businesses. Innovative, agile businesses, solving pressing local market problems with the incredible potential to not only scale commercially but to have a powerful impact on the customers and markets they interact with. 

A big challenge faced by many start-ups across the region is a commercial talent and skills gap. Many company founders are software builders with strong technology backgrounds, meaning that when trying to monetise their product, scale up their business or raise seed finance, execution is difficult.

Our role is helping companies overcome these challenges, offering top start-ups access to corporate talent around the world. Teams come and support start-ups on the ground, helping to deliver high impact projects focused on growth and investor readiness.

The most exciting aspect of the start-ups we have worked with in Africa is their ability to scale and generate revenue and value economically. Equally, we have seen first-hand, the widespread social impact start-ups are having, as more and more consumers get access to their products and services.

Two examples of markets where clever, commercial innovation can lead to big social impact are agriculture and healthcare.

Soil Testing in Kenya

We recently worked with UjuziKilimo, an ag-tech start-up in Nairobi helping farmers understand and make better decisions about their soil. Rural smallholders account for over 70% of the food produced in Africa, meaning that crop failure and poor productivity can have extremely serious consequences.

We believe that a technology like this could be easily rolled out internationally.

Soil testing is an integral part of agriculture around the world, however, in Kenya, less than 5% of smallholders in Kenya have had a soil test carried out on their land. This means that many farmers simply don’t know enough about their farmland, and often attempt to grow the wrong crops and use the wrong fertiliser.

UjuziKilimo has set out to solve this problem, and have developed a piece of hardware that allows farmers get access to a soil report in a fast, accurate and easily digestible way. Their method is real time and a farmer can have an extensive soil report and associated advice within three minutes of the test being carried
out. Their team, business model and product all show great potential.

We believe that a technology like this could be easily rolled out internationally, and it offers attractive benefits to commercial agricultural growers as well as consumers in the mass market. The company’s founding team are also extremely talented and have big visions for their company.

Boosting Emergency Response Rates in Kenya

Accessing high-quality health care in Kenya is very difficult for a large proportion of the population. This isn’t helped by the fact that response rates to emergency services callouts in the country are lower than 20%.

This low rate of response has very serious implications in a country where road accidents, robbery, assault and domestic violence are still very much common place. Edwin Inganje, founder and CEO of Usalama, an app connecting users to emergency services in Kenya, experienced this problem first hand during his time at university when was held up at gunpoint and robbed. He had no way to alert the emergency services about the incident, and so set out to find a way to solve this problem using tech.

To tackle the issue, Usalama has developed an app that connects users to emergency service providers. Their partners include security companies, ambulance services and Nairobi Women’s Hospital, and their model strikes an exciting balance between opportunities for commercial growth and real social impact.

The majority of the start-ups in our network are looking to raise finance, usually to help expand product development, talent recruitment and marketing.

The Usalama app allows Kenyans to send alerts to loved ones, ambulance service providers, security companies and hospitals, whenever they are in need of help. A GPS geo-mapping feature means that people can be found easily, in a part of the world where accurate addresses are rare. Usalama’s most exciting feature is their ‘walk with me’ function, which allows loved ones to track users as they walk from A to B.

Catalysing Investment in African Tech

The majority of the start-ups in our network are looking to raise finance, usually to help expand product development, talent recruitment and marketing. However early stage finance is proving very hard to come by for many entrepreneurs building tech businesses south of the Sahara.

The African continent has long been seen as the next big region for high growth, and entrepreneurship and the private sector will be at the heart of this story. However, investors still see markets like Kenya, Ghana, South Africa and Rwanda as high risk, given a range of factors including currency, political instability and infrastructural challenges. Combining this uncertainty with the risky nature of early stage equity investing anywhere in the world means that many investors are still put off.

Despite this, investment has increased into the tech space in the last three years, as the quality of projects improves, and the risk profiles of investors ease. We strongly believe that as the quality of business ideas, teams and strategies improves, and the understanding of what investors look for when investing at an early stage gets better, more and more investment will arise and the success rates of start-ups in the region will improve dramatically.

The Baobab Network identify start-ups that have developed new technologies and are solving big market problems. These are companies they believe can scale globally, and have an impact on people’s lives all over the world. For more information visit: www.thebaobabnetwork.com

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