There’s a global slowdown in free-flowing venture capital with tech start-ups struggling to secure the funding necessary to get businesses off the ground and running.
And while venture capital funding exploded last year as investors looked for companies with higher growth rates than those publicly traded on stock markets, that money has all but dried up.
Investors poured money into these companies based on massive valuations but when those valuations are revised or the bets turn sour, it could lead to a retreat from newcomers in venture investing, writes Financial Times.
The Economist reports that despite this, Africa is still able to secure venture capital with ease. The continent has long been touted as the next great frontier for tech innovation with cities like Lagos, Nairobi, Johannesburg and Cape Town all competing to be the next ‘Silicon Valley’.
Jack Dorsey and Mark Zuckerberg, among others, have been champions for talking up the prospects of African tech start-ups and innovation, and have invested money across the continent.
But investments from Silicon Valley’s elites will fail unless Big Tech is willing to invest not just in start-ups but also in the infrastructure that many of these small businesses have to rely on to operate and remain sustainable.
In Nigeria, rolling power cuts can seriously hamper the tech sector, which relies heavily on electricity while there are similar problems in other African countries, like South Africa. While many turn to generators to supplement their power needs, a lack of fuel supply and rising costs mean many do not have the means to always make use of back-up power supplies.
Sources: Financial Times, The Economist, New York Times
