Home Technology Investment in Tech Startups in Africa Reached $5 billion in 2021

Investment in Tech Startups in Africa Reached $5 billion in 2021

3 min read

The past years there has been a heated debate whether investing in startups pays off, or investors would put themselves into financial risk. These companies, startups, are in their very first stages of development and business, and, initially, lack the capital needed to move their idea forward. At the beginning, they do not count with a fully advanced model for their business, and because of this they are seen, by some,  as a risky, unwise investment. However, many others state that if the idea, product or service offered is feasible and solid, they can get to be a “smart financial move”. Most often, these incipient associations present a product for which there is demand in the market and which is within the field of innovation, this is also a good reason to make an investment. This business has grown over the years, especially startups interested in technology. 

Across the African continent, an array of these companies involved in different fields can be found, for instance those concerning education, mobile apps, E-commerce, health care, and logistics. Among the top emerging industries, there is one which leads the list, Fintech (more info here). This term is a blend which combines the words “financial” and “technology” to form a new meaning. As the combination of words clearly signals, the term makes reference to businesses that use technology or technological advancements to improve and strengthen their finances. The industry is rapidly growing and can be applied in a wide variety of ways. The belief is that investing in this kind of new companies would bring more benefits than hazards because of the increase in the use of technology, like mobile phones and the internet. 

To further illustrate and understand what these companies do we could look at one more specific example: insurtech. These technological innovations are provided to improve the insurance industry. As it was stated before, startups look for needs in the population and work with those that seem to be of greatest demand, acquiring a comprehensive insurance premium for your car surely fits that description. Companies or websites like https://www.quotesadvisor.com/, to mention one case useful in South Africa, safely compare car insurance providers. Provided that individuals make use of tools like this one, thinking about security is also important, for instance it would be wise to choose a browser which does not ask for your personal information. When investing, transparency and privacy have to be clearly promoted. 

Having a brilliant idea is the first step to start building a great company. Startups, in any field in which they specialize, are an example of entrepreneurship and ambition, according to NorthWestern.edu. Usually, investors are placing their money in the hands of dedicated, and ambitious people who try to diversify and create new products, who try to offer new solutions to long existing issues. Many challenges come up along the way, find a good location, legal support and funding. However, although it can be a difficult endeavor, it can prove to be highly gratifying, being the possibility of building a legacy on your own, providing job opportunities and job fullfilment to those who are part of it. 

In any matter, these growing enterprises are here to stay. The amount of money invested in them in the African continent illustrates the vision that they will provide a positive return. Therefore, although it is a risky investment, it can also be exciting and beneficial. Investing in a startup is a chance to make a difference, to diversify and bet on refreshing, new ideas. There is, for sure, yet more to see in the development of this field. 

Last Updated: January 20, 2022

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