June 29, 2021

Suddenly, Silicon Valley sees Africa in a new light

Africa comes out of the pandemic, not as a charity case but as a business opportunity. Will Silicon Valley seize it?

At the beginning of 2020, as COVID fears turned into a nightmarish reality, everyone assumed we would witness the worst effects in Africa. 

We all assumed there would be a necessary, albeit routine, effort towards charity for Africa. But charity and donations aren’t the types of investments that Africa has seen a surge in. 

Instead, VCs and the tech community are looking at the continent in an entirely different light, as in the eyes of Twitter’s Jack Dorsey “Africa will define the future.” 

Nobody knows this more acutely than Felix Orwa and Make Este-McDonald of Sote. At the start of the pandemic, Sote — a logistics platform intended to simplify tracking shipping containers and customs across Africa, appeared to be on life support.

They asked employees to take salary cuts and relied on PPP loans just to keep the business afloat (startup stories like these don’t make the front page of Techcrunch). 

As Este-MacDonald, co-founder of Sote, described to Crunchbase, “The VC world kind of shut down for a little bit, and not only did it shut down completely, but certainly Africa was always kind of on the fringe of what they were willing to do. And the idea of doing Africa in this super uncertain environment — there were just no takers for that.”

Historically, VCs have overlooked Africa but there are signs of changing tides. 

In 2015, VC investment in Africa stood at a paltry $250 million across the continent. To put it into context, Snapchat raised $500 million in a single round that same year. 

In 2020, VC investors put in nearly ten times that amount. Perhaps the pandemic is the event that changes the perception of Africa from something that deserves charity or sympathy to an unparalleled investment opportunity. 

Sote Co-founders

Este-MacDonald recalls one story where early in their fundraising process, an investor expressed interest in the deal and then talked internally only to come back with comments like, “Well what about the corruption in Africa?” 

For Este-MacDonald and Orwa, Covid and the George Floyd protests proved to be a defining moment as investors like Sahil Lavingia expressed interest in supporting Black businesses. 

The Sote founders responded to this outreach and ended up receiving a lifeline -- a 500,000 check. 

As competition for deal flow heats up in the US and Europe, the smart money will look towards the future, and it's obviously Africa.

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