African startups need an enabling ecosystem to succeed

Gerald Maithya, Startups Lead, Africa Transformation Office. [File, Standard]

The thriving African startup market is well-positioned to become a pillar of the continent's digital economy, fostering local innovation through relevant solutions to societal challenges.

According to research, funding for African startups more than doubled to $3.14 billion (Sh379 billion) in the first half of this year. Nigeria, Egypt, South Africa, and Kenya are the continent's top investment destinations, though funding is also increasing elsewhere, with financial technology (fintech) remaining the dominant sector.

Investments in Africa's startup ecosystem are increasing at a rapid pace. According to the Organisation for Economic Co-operation and Development (OECD), over 640 tech hubs are active across Africa, accelerating innovation and creating jobs, particularly among the youth.

However, while Africa has enormous potential to become a world leader, the African start-up market currently accounts for less than one per cent of global venture funding.

So, what is preventing African startups from achieving global success? There are numerous factors at work, but systematic impediments in the start-up innovation ecosystem have an impact on the likelihood of success.

To be sure, one firm cannot have the necessary impact on its own; it takes a network of companies and organisations working together to develop market-appropriate consumer and customer solutions.

The power of ecosystems is highlighted in an Accenture report titled Tech Startups Will Support Africa's Growth. "An ecosystem is defined by the depth and breadth of potential collaboration among a set of players: each can deliver a piece of the consumer solution or contribute a necessary capability," says the report. The startups themselves, market makers, potential clients (corporate or individual), governments and regulators as well as tech development partners are all part of the start-up ecosystem.

Not only must the startup be at the centre of the ecosystem, but the right development, financial, and government partners must be involved from the start to make the journey inclusive and sustainable.

Startups require not only the right technology to succeed in the long run, but also the right operations, a blueprint for their people's requirements, and the right type of business architecture.

For startups to manage the growth phase of their business, the ecosystem must address these concerns holistically.

Experienced mentors from large corporations and venture capital boards, as well as access to skilling resources, can play an important role here.

Artificial intelligence (AI) technology is one sector that has the potential to significantly contribute to the Middle East and North African economies by 2030.

Synapse Analytics is an AI company based in Egypt that helps businesses develop, build, manage, and scale their AI solutions to optimise and expand their operations while maintaining sustainable growth (MaaS).

Working with Microsoft ATO, Synapse was able to significantly accelerate development and launch its product earlier than expected.

Microsoft's support teams and access to technology accelerated the product timeline by nearly three months in an 18-month projected timeline.

A narrow sector focus directs the attention of both startups and the companies and potential investors who interact with them.

Startups that align with the business priorities of potential partners, customers, or funders will be valuable to them.

Tech accelerators play an important role in creating an enabling environment that assists startups in identifying and being very clear on what sectors they are targeting, what problems they are attempting to solve, and the opportunities available within that sector.

Recognizing the critical role that accelerators can play, Microsoft has signed partnership agreements with tech accelerators across the continent to collaborate on supporting startups through a combined business and technical curriculum.

Health tech has the potential to solve Africa's problem of a lack of healthcare facilities and skills, particularly in remote areas.

Deepecho, a Moroccan startup, uses AI and deep learning to mimic functions normally performed by a trained sonographer, assisting radiologists and clinicians with prenatal ultrasound video diagnosis.

These diagnoses can then be used to help prevent birth defects, preterm birth, low birth weight, and the potentially dangerous outcomes that are associated with them.

This is especially important in areas where hospitals are typically understaffed and under-resourced.