Hey there, Habibi!
I spent the entire day at the Dubai Harbour, one of the two venues for the well-attended GITEX conference. Over four hours, I listened to venture capitalists, founders, and policymakers from across the globe.
Savannah Maziya, Eswatini’s Minister of Information, Communication & Technology outlined her country’s ambitious plan to ensure that its 1.2 million citizens get a slice of the $2.9 trillion economy artificial intelligence (AI) technology promises Africa. The government is actively seeking international partnerships, such as the MoU with the United Arab Emirates to accelerate digital transformation in the country. In addition to its human capital, Eswatini offers resources to businesses—incubators for startups leveraging AI technology, biotechnology, space technology, agritech, and more, It is also offering energy resources, and data sovereignty, to bigger enterprises that plant their roots in the country. “policies that offer predictability to investors.”
The panel that followed was less aspirational and more introspective. The speakers discussed why, despite the continent’s larger population, the venture capital scene was performing less than other ecosystems. They considered the “Japa syndrome,” which refers to highly-skilled employees and founders leaving for more developed countries. The speakers tossed around solutions to the problem and unanimously settled on one thing: that people who outgrow their countries will always move to where the grass is greener unless the country matches their pace in development.
The speakers also discussed the funding drought, arguing that it was a wake-up call for both entrepreneurs and investors. For startups, some speakers suggested that founders, after some soul-searching, may realise that they are building SMEs, not startups—and do not need VC funding at all. These businesses could explore other forms of financing like revenue-based financing, inventory financing, or manufacturing financing, and grow to become regular profitable businesses.
Speaking about educating investors, another panel called for an action that was also threaded through some conversations: High-net-worth individuals (HNIs) need to be educated about how venture capital works. While the idea of getting a 10x return on their investment is appealing, the reality is that it hinges on the success of two out of 10 startups, which is an unnecessary and unreasonable risk.
“If we want to see them in VC funds, which are currently populated by DFIs and foreign corporates, there needs to be more education to win over HNIs.”
And as one speaker said, “It’s just a matter of time. The VC-funded African tech ecosystem is about eight years old, and that’s not even up to the lifetime of a fund,” urging us to remain optimistic and patient.
