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African Tech-start Up Funding Will Double by 2025

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African business leaders are forecasting a surge in spending on tech start-ups as foreign direct investment and improved internet connectivity helps establish the continent as a tech superpower,  new research for blockchain-based mobile network operator World Mobile shows.

More than half (54%) of African senior executives expect spending on tech start-ups on the continent will more than double by 2025 to $10 billion or over compared with the $4.9 billion raised last year**. Around one in six (16%) believe more than $15 billion will be raised.

The study with African business leaders from companies with total annual revenues of more than $6.75 billion identified foreign direct investment and improving internet connectivity as the key drivers for the expansion.

Around three-quarters (75%) believe the investment will come from Western countries while 66% believe China will be a major source of investment. Nearly six out of 10 (57%) believe dramatic improvements in internet connectivity will be the main support for expansion as it drives education, healthcare, and business.

The research among senior executives at companies with average annual revenues of $70 million based in Tanzania, Angola, Botswana, Cameroon, Ethiopia, Ghana, Nigeria, and South Africa found nearly half (45%) believe Africa will be a tech superpower within 10 years.

They point to the development of Africa’s tech ecosystem – nearly 90% of those interviewed expect it to grow by at least half its current size in the next three years with 15% expecting it to double in size during that period.

That in turn will expand Africa’s role in supplying technology to the rest of the world – around 60% of executives expect that to grow in the next five years with one in 10 predicting dramatic expansion.

Micky Watkins, CEO of World Mobile said: “Africa is seen as ripe for economic expansion by its own business leaders and technology will play a vital role in delivering the development.

“The potential is huge as currently Africa only accounts for 0.2% of the global money invested in technology start-ups so there is capacity for growth and huge interest from Western and Chinese foreign direct investment.

“Much of it hinges however on improving internet connectivity and particularly in areas which are hard to reach and ignored by traditional companies. We are committed to playing our part in supporting the development of technology businesses throughout the continent.”

World Mobile is helping to revolutionise internet connectivity in sub-Saharan Africa and is already working with the government in Zanzibar where it is launching a unique hybrid mobile network delivering connectivity supported by low altitude platform balloons.

Its blockchain-based network vastly reduces capital expenditure and cuts prices compared to traditional telecom operators and World Mobile is expanding in Tanzania and Kenya, as well as other territories underserviced by traditional mobile operators.

Its balloons will be the first to officially launch in Africa for commercial use, offering a more cost-effective way to provide digital connection to people and is the first step in its mission to help bring nearly four billion people online before 2030 in line with the UN and World Bank’s SDGs.

The World Mobile approach is more sustainable, in environmental, social and governance terms. Environmental impacts are mitigated using solar-powered nodes, second-life batteries, and energy-efficient technology. World Mobile creates a positive societal impact through the application of its circular economy model – a “sharing economy” where locals share in the ownership and rewards of the network. Governance is maintained by the secure underlying blockchain technology, which means that user data privacy is guaranteed and not commercially applied as it is by other mobile operators.

Is the CEO/Founder of Investors King Limited. A proven foreign exchange research analyst and a published author on Yahoo Finance, Nasdaq, Entrepreneur.com, Investorplace, and many more. He has over two decades of experience in global financial markets.

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Ride-Hailing Company Didi Resumes Registration of New Users After Ban is Lifted From App

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China’s ride-hailing giant Didi has resumed the registration of new users on its app, eight months after it was suspended by Chinese authorities.

Didi often referred to as “China’s Uber”, has for some time been awaiting approval to resume onboarding users on its platform, as a key step to return to normal business since the app was banned.

Having carefully cooperated with the Chinese cybersecurity review, the authorities have lifted the ban by granting them the go-ahead to resume new user registrations and downloads of its apps in China as soon as this week.

The latest move comes as Chinese policymakers are seeking to restore private sector confidence and counting on the
technology industry to help spur economic activity that has been ravaged by the COVID-19 pandemic.

The company said via a statement, “Our company has carefully cooperated with the country’s cybersecurity review, seriously dealt with the security problems found in the review, and carried out comprehensive certification for more than one year.

“Didi would also take effective measures to ensure platform safety and data security, and as well safeguard national cyberspace security”.

Investors King understands that trouble started for Didi in July 2021, when Chinese authorities ordered the country’s app store to remove Didi’s app, citing reasons that the platform was illegally collecting users’ data.

25 of its mobile apps were taken down, registration of new members was suspended, and it was slammed with a fine of &1.2 billion over data security.

The ban on Didi occurred less than a week after it went public on the New York stock exchange, in the biggest U.S. share offering by a Chinese company since Alibaba debuted in 2014.

Founded in 2012, Didi is China’s dominant ride-hailing service with 550 million annual active users globally. In the first quarter (Q1) of 2021, the app had 156 million monthly users, well above Uber’s 98 million in the same period.

The company handled 25 million rides a day in China, during the same period while Uber did 16 million.

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Indian Startup Sharecut Deactivates Accounts of Over 400 Employees Due to Macro Economic Factors

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Indian social media startup Sharecut has deactivated the accounts of over 400 of its employees, which is about 20% of its workforce, as it seeks to navigate the global economic downturn.

The startup which has already informed affected employees about the deactivation of accounts, through its CEO Ankush Sachdeva, disclosed that such a drastic decision was taken to ensure the financial health and longevity of the startup.

In his words, “We are taking a very different decision today to part ways with around 20% of our talented full-time employees to ensure the financial health and longevity of our company in the current uncertain macroeconomic environment.

“In hindsight, we overestimated the market growth in the highs of 2021 and underestimated the duration and intensity of the global liquidity squeeze”.

Speaking on the deactivation of laid-off employees’ accounts, the CEO disclosed that revoking employees’ access was not an ideal experience, although, after much deliberation, he disclosed that that was the only practical solution.

For the affected employees, they will receive the total salary for their notice period and two weeks’ pay as ex gratia for every year they served the startup. The employees will also get  100% of the variable pay until December 2023, and their health insurance policy coverage will remain until the end of June.

Also, for employees who have to leave the startup as part of the job cuts, their Esops that vest on April 30, 2023, will be retained by those staffers.

Investors King understands that a month ago, sharecut laid off 5% of its employees after it shut down its fantasy sports platform Jeet 11 after disclosing that the platform never gained any meaningful traction among its users.

Sharecut since its operation had raised a total of $1.7 billion in funding over 15 rounds and is reportedly funded by 26 investors with tech giant Google as one of the lead investors.

The start-up has a total workforce of around 2,300 employees, but the recent layoffs at the company will no doubt result in a decline in the number of employees.

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Startups in Four African Countries Account For 75 Percent of Funding Raised in 2022

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Recent reports reveal that startups in four African countries, Nigeria, Kenya, Egypt, and South Africa, accounted for 75 percent of the total fund raised in 2022 in Africa.

Startups in Nigeria accounted for ($1.2bn), Kenya ($1.1 bn), Egypt ($820m), and South Africa accounted for ($550m) adding to the total sum of $4.85bn that was raised in 2022.

Analysis from database and Insights predict that Africa could exceed $5bn in funds raised, noting that the fund raised in 2022 saw an 11 percent year-on-year increase from 2021.

Meanwhile, these four African countries (Kenya, Nigeria, Egypt, and South Africa), have been reported to dominate Africa’s funding startup scene.

The vast majority of venture capital in Africa is often scooped by these four countries fondly referred to as “Africa’s big four”.

In a 2021 report by African Development Bank (AFDB), it disclosed that these four countries accounted for about a third of the continent’s startup accelerators and incubators, and also received 80% of foreign direct investment (FDI) into the African region.

Also, a disrupt Africa report revealed that start-ups in the “big four” raised a combined $1.9 billion in 2021, about 92.1% of the overall total investments raised in Africa for that year.

Their funding has continued to increase significantly over the years from 79.4% in 2018 to 87.5% in 2019, to 89.2% in 2020.

These four countries have been reported as favorites amongst investors, due to the fact that they innovate faster than other African countries when it comes to startup investment and funding in large part as a result of their large economies and sizeable populations.

On the other hand, Africa’s startup funding in 2022 was dominated by fintechs, accounting for 37 percent of deals.

This doesn’t come as a surprise that for so long, Fintech startups have continued to dominate Africa’s funding scene.

In the year 2021, fintechs dominated the fundraising scene, accounting for nearly $3 billion, or two-thirds of all the investment realized by startups across the continent.

Reports reveal that the amount was also more than double the $1.35 billion investment that fintechs in Africa raised in 2020, and triple the amount in 2019.

Given the deepening of mobile phone usage and internet penetration in Africa, it has been predicted that funding for fintechs will increase year-over-year.

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