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Love And Tough Love: Our Take On 8 African Startup Ecosystems

By Matt Davis | Thu Nov 30 2023
Our bird’s eye summary on the heels of our investment tour
Renew Capital, along with a growing network of angel investors from around the world, have spent over a decade immersing ourselves in the vibrant cultures and entrepreneurial spirit of Africa. We initially focused on Ethiopia - not easy, but rich in culture and packed with potential - and have recently expanded across the continent into 9 countries. We’ve had wins, losses, and an amazing investment experience…and we’re just getting started.  
Each day we see new signs of growth. Laura and I recently embarked on a six-week investment trip across East and Southern Africa, including a visit to Ghana in West Africa. We engaged with more than 100 founders with the aim of selecting the best deals for our upcoming Renew Venture Lab Fund, which is a feeder fund to our venture capital fund. What we observed was a brilliant, diverse and energetic blend of talent, culture and progress. Africa is without a doubt changing and developing, much faster than most of the world may even be aware of. I hope this brief recap sheds light on this potential and inspires some of you to get on a plane and join us for an unforgettable investment experience. 
A short manifesto 
I believe (and hope) that in the next ten years, the West’s perspective of Africa will undergo a radical paradigm shift, resulting in the redirecting of billions of dollars given each year in the form of aid and charity to investments in Africa’s burgeoning startup ecosystem. 
There has not been one discussion I have had in the last 5 years where I heard an African advocate for more charity or aid. The continent seeks partners that believe in their potential and will invest in their future. And that future is being written in the code of startups and the strategies of relentless entrepreneurs. 
At Renew Capital, we're working with a global network of investors who are not just observers; they are actively participating in this transformation. And the founders we are backing are embracing their new role as the ambassadors of Africa’s future. 
Africa is not just rising – it's thriving, innovating, and redefining possibilities.
Now, let's delve into the highlights of our visits to various countries, shedding light on their entrepreneurial spirit and investment potential.
Addis Ababa, Ethiopia: Awakening the Sleeping Giant (our home)
Please note that I’m biased in my analysis of Ethiopia. It’s our Africa home and I have a deep place in my heart for this great country. I also have some tough love for her; earned through holding our ground during a civil war and losing a number of investments in that season. 
Ethiopia, historically considered a dormant tech market, is experiencing a surge in fintech interest. The introduction of M-PESA sets the stage for exponential growth, with innovative partnerships and government initiatives fostering a conducive environment. Renew Capital, present in Ethiopia for 12 years, believes in the awakening of this market. That said, we’re moving with caution. While the capital markets are opening up, it takes time for the motivations of leaders to work their way down to the rank-and-file bureaucrat who approves or rejects your investment license. We’re ready to fight for every approval - Ethiopia is a sleeping giant and its tech scene is 20 years behind others, but when it decides to move it will be huge. 
Accra, Ghana: A Rising Star in Fintech?
Ghana is gaining attention as an emerging destination in the African fintech landscape. Comparisons to stable Rwanda and entrepreneurial Uganda create a market balancing stability with innovation. Ghana's focus on financial inclusion and cross-sector collaborations indicates a promising future. We're excited to make an investment there, soon!
15% per annum: Ghana is the fastest-growing fintech market in Africa. 
Dar es Salaam, Tanzania: Kickstarting the Ecosystem
In some ways, Dar es Salaam reminds me of Addis - starting up and ripe with potential. But we need to get movement to go from potential energy to kinetic energy, and that’s going to require some big, focused pushing. 
When we were there the ecosystem seemed close-knit and small. There was a youthful energy to the meet-ups we hosted and attended. It seems the government is supporting tech and innovation, so, while our pipeline was thin, we are eager to roll up our sleeves and start working “in and on” the ecosystem. I give it another 12 to 24 months and we’ll start seeing an impressive pipeline of deals coming out of Tanzania. 
I would have liked to see a bit more innovation and more traction from the companies that pitched to us. That said, we’ll definitely be coming back to a few of them (awesome founders), soon. 
Lusaka, Zambia: Discipline and Stability are Good for Growth
Lusaka mirrors Rwanda's disciplined setup, offering stability and potential for growth. Investments in tech infrastructure and educational initiatives to bridge the skills gap contribute to a conducive environment for tech companies. It was hard for me to get a strong read on the ecosystem, so we’ll need to spend more time getting our heads around how the cultural environment impacts its investment potential. Oddly I would say of all the places, Zambia was the most polished culture I have engaged with. I found myself looking for some grit, but there were a few founders there that I liked. I was also impressed with the budding angel investment ecosystem; I see co-investment potential on the horizon. I also didn’t feel like the Zambian startups were trying to punch above their weight class - which was nice. They seemed realistic about valuations and their heads weren’t too big, which was a welcome refresher from some countries we visited. 
Kampala, Uganda: Dynamic Private Sector Amid Political Transitions
Uganda was the first place I started to do my work in Africa years ago. And its private sector culture has remained a unique blend of chaos and growth. Uganda's laissez-faire strategy is working. But everyone seems worried about the upcoming leadership transition - so we’ll keep an eye on that. But I loved the energy of Uganda and there are some sharp founders doing great work there.
Kigali, Rwanda: Investments and Excitement Bearing Fruit
Rwanda radiates hope for the future. The country is positioning itself as a regional launchpad for startups. International collaborations, outside universities, and a government keen on fostering innovation make Kigali a hub for cross-border startup innovation. “Yeah, but it’s small…” is a true and cliche thing to say. But like Seattle weather, we know there is a lot of sun, and we just hope not too many people find out about it before we get a head start. Rwanda, we're ready! 
Nairobi, Kenya: Awesome but Pricey Amid Economic Concerns
Nairobi stands out with sophisticated founders pitching innovative ideas, but (currently) expensive valuations. It’s November 2023, not 2022. Plus, the country is having macroeconomic challenges. All that to say, the talent and maturity of the pipeline in Nairobi is exceptional. I loved it. They have a rapidly evolving fintech ecosystem but we’re navigating it carefully. There is some soft money still sloshing around buying companies at prices that would make you shake your head. The strategic founders will readjust quickly, and position their current raise in a way that enables a faster raise in 12-18 months once the dust settles.  
Maputo, Mozambique: A Great Afro-European Vibe and Emerging Tech Scene
Maputo, with its Afro-European fusion, faces some structural challenges but exhibits immense entrepreneurial resilience and potential. Financial inclusion initiatives and international investments in natural gas provide optimism for economic growth. A lot going on with the government "sandbox" initiative. Most companies were too early, but a few...could break out. We are excited to hopefully make our first investments there soon!
In conclusion, we're very excited and were amazed by how much diversity and growth potential we saw! Now, it's time to make the hard decisions about who to back and how to come back to.
As we continue to expand into some of these untouched and potential-rich markets, we will continue to share our insights with the larger community. We’re driven by a broader mission to change the way the world engages Africa, from giving to investing. It won’t be easy - transitioning and learning to invest. But fortune favors the brave! If you’re looking for an unforgettable experience or you’d like to share your own stories, please don’t hesitate to reach out! 
Renew Capital aims to back the founders leading Africa's startup revolution. We're gearing up to make significant investments in ventures across 10 countries and 8 sectors. We work with a global network of investors who believe in Africa's immense potential and the power of the private sector to drive innovation and economic development. If you are an accredited investor and would like to learn more, take 2 minutes to apply to Renew Capital Angels™  to schedule a meeting with our team.
This blog is intended for informational purposes only and does not constitute investment advice or a recommendation to you, or an offer to sell or solicitation to buy any security. Investments with Renew Capital are speculative in nature and involve a high degree of risk. The Renew Capital Angels invest in companies located and doing business in sub-Saharan Africa. Investors should understand and be willing and able to handle the risks of investing in such frontier markets, which are more significant than the risks associated with investing in securities of U.S. companies or in other developed countries and include the risk of total loss of an investor’s entire investment.
Renew Capital is an Africa-focused impact investment firm that backs innovative companies with high-growth potential. Renew Capital manages investments made on behalf of the Renew Capital Angels, a global network of angel investors, foundations and family offices who seek financial returns and sustainable social impact. For the latest on investing in Africa, subscribe and follow us at our social links below.

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