In the decade since mobile money first sparked international interest in African innovation, hundreds of tech hubs have sprung up across the continent; global giants like GE have rushed in to build innovation centers; and the venture capital industry has steadily grown. Nevertheless, the continent’s tech scene continues to face challenges.
The rise of African innovation has inspired thousands of new start-ups, and this trend will continue into the foreseeable future. Existing acceleration programs, however, still leave growth-stage companies in need of additional support to secure investment and scale their businesses across borders. With many of the continent’s acceleration programs lacking in quality, we hoped to introduce an innovative post-acceleration program, XL Africa.
After infoDev launched its mLabs in Kenya, Senegal, and South Africa in 2011, they introduced incubation programs that successfully supported the creation of over 100 start-ups that raised close to $15 million in investments and grant funding, and developed over 500 digital products or services. As these ecosystems and start-ups have matured, more needs to be done to improve the marketability of these companies to global and local investors.
This year, our team launched XL Africa, a pan-African acceleration program for growth start-ups seeking Series A funding, between $250,000 and $1.5 million. XL Africa received over 900 applications for 20 spots. Some of these start-ups, like Sendy and CoinAfrique, are mLab program alumni.
Sendy uses motorcycle delivery to compete with Kenya’s inefficient postal system and expensive private courier companies. Sendy had first joined mLab East Africa at the early stages of customer discovery and product validation, and through its support, the company has grown considerably. With a network of over 300 drivers, their app enables individuals and businesses to connect with drivers to request on-demand courier services, while also providing GPS-enabled tracking, transparent pricing, and insurance. Sendy now facilitates over 11,000 deliveries each month and is a prime example of an innovative company ready to compete with larger players across the region.
Unlike many acceleration programs, XL Africa does not take an equity stake in the companies, but a key value proposition is the exposure to global and local investors. To ensure a quality pipeline, the XL Africa selection process was investor-driven. We worked closely with the IFC’s Startup Catalyst team along with other investors from Goodwell Investments, Knife Capital, Nest Africa, Silvertree Capital, Singularity Investments, TLcom Capital, and 4Di Capital. These investors consciously selected companies, such as Sendy, that could most benefit from XL Africa’s specialized curriculum in the hopes of attracting additional investment.
In the lead-up to the XL Africa Cape Town residency, occurring Nov. 6-17, the 20 selected XL Africa companies have begun virtual coaching paired with online video tutorials. During next week’s Venture Showcase at the fourth annual African Angel Investor Summit in South Africa, the teams will stand before prominent African investment groups to present their internationalization strategy and fundraising needs.
Of course, funding alone cannot determine the future of Africa’s tech scene. Policy matters too. Thus, we’re also hosting a workshop, “Scaling African Growth Entrepreneurs,” to share our experience and insights with select government officials and policymakers from across the continent. This policy workshop will showcase infoDev’s experience in accelerating start-ups and the importance of developing an enabling policy environment that supports the growth of innovative ecosystems.
We’re excited to see these efforts come together in Cape Town over the next two weeks, but even more excited for the future of these 20 start-ups and what their success will mean for the ecosystems in which they operate. We might not uncover the next billion-dollar unicorn, but we will certainly learn to better enable high-growth start-ups across the continent.
Credit: GANESH RASAGAM