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As the AI boom diverts investment back

towards the US, African entrepreneurs

are having to find new sources of

funding. And now, a sector that once

dependent on overseas capital needs to

find domestic sources to plug the gaps.

>> In the US, you obviously have a lot of

homegrown AI that maybe isn't happening

to the same extent in Africa. I think

that's okay. So I think naturally I

would expect the numbers to show

increases in African investors more than

US investors because US investors are

just capturing a domestic opportunity

that in a lot of ways could be a multi-

trillion dollar opportunity.

>> How African startups respond could shape

the future for the tech sector on the

continent and create a new set of

winners and even potentially some

losers. So can entrepreneurs tap into

the talent on the world's youngest

continent? And could new markets like

Angola and Uganda catch up with South

Africa, Nigeria and Kenya?

>> If you look at other countries like the

US for instance, big focus is AI. Yeah.

Right. But here in Africa, companies are

really trying to solve everyday

challenges and even trying to scale

solving those challenges really. On

today's Next Africa podcast, we're

looking into the state of Africa's

startup ecosystem and what our latest

startups to watch list tells us about

the future for entrepreneurs across the

continent.

I'm Jennifer Zabasaj and this is the

next Africa podcast, bringing you one

story each week from the continent

driving the future of global growth with

a context only Bloomberg can provide.

Shortly, we're going to hear from the

founder behind one of our startups to

watch. But first, to help me take a

closer look at the startup landscape, I

am joined by none other than our senior

tech reporter, Looney Prinsoo. Looney,

how are you?

>> Good. How are you doing, Jane?

>> I'm good. It's always nice to have you

on the podcast, especially to talk about

a subject that you are very well

knowledgeable about. So let's just talk

about the startup sector because you

take a look at the numbers and the data.

What are we seeing happening right now

in terms of the growth of the startup

sector across the continent?

Last year we actually had a quite a good

year for African startups and we raised

about $3.4 billion in the sector. What

we did see though is a bit of a move

from overseas investors to local African

investors going into the sector a bit

more which in some ways are quite

exciting. So we saw Optasia which is a

fintech African fintech list in

Johannesburg and raising about $345

million I think at a valuation of a

billion dollars. Very big IPO for South

Africa and Africa in general. We had a

good year last year. This year, we're

seeing how global volatility is playing

out, but there's a few big ones in the

pipeline, but it's looking much better

than 2023, 2024 in terms of African

startup funding

>> and especially when it comes to that

investment pipeline. Looney and you and

I talk about this quite extensively and

we even spoke to general partner of part

to John Dem about what he's seeing and

it speaks to what you were just saying

how we're seeing the balance shift

between overseas investors and domestic

investors. Let's just hear what he had

to say and I have a question for you

after.

>> The reality is it's not for lack of

entrepreneurs or startups. We believe

what's happening is there is not enough

capital targeting this space because of

since the VC bubble of 2021 bursted.

Appetite for risk

globally in the VC space has decreased a

lot. So we don't have a fundamental

problem. We have talent. We have

opportunities and we have startups

addressing them. What we're seeing is

these startups not getting the capital

they need from angel to precede to seed

and you can chalk this so to one

investors willingness to take risk has

decreased. As we mentioned this in

previous report the number of active

investors in Africa was divided by two

between 2022 and 2023. There was a

flight of investors away from Africa

that year and they still we still

haven't recovered. So there are less

investors around and those who are

around are taking less risk and a few

investors who are highly specialized in

seed who are doing 50 to 60 deals per

year are now doing about 10 or some of

them are just completely absent from the

market. So this is where I think we need

to focus and everybody's talking about

it. For instance, the DFIs who have been

funding a lot of this market are all

considering discussing or even testing

programs to boost the seed again. But

this is where we need all to be focusing

today.

>> Okay. So, that was his take. Looney, can

you get into what we're seeing in terms

of the breakdown of African investors

versus overseas investors into the

startup ecosystem?

>> Sure, Jen. So, historically, overseas

investors were quite heavily investing

in African startups. The split was about

80% overseas investors, 20% African

investors. That has significantly moved

last year. Last year we saw about 55%

coming from overseas investors and the

balance of 45% coming from African

investors. It's a big shift. I think

it's quite good for African investors to

invest in Africa and invest in African

startups and get that ecosystem going

for the continent.

And we hear that quite often in at the

events that I go to, we hear about how

African investors really need to be the

ones to lead the tide for a number of

these companies. What do you hear in

terms of the discussions that you're

having with investors about what they're

looking for with with some of their

companies that that they're investing

in?

>> A big theme in Africa has been the

fintic space because we have a very

young the fastest growing population in

the world. As we've said, the youth is

basically turning to technology for all

sorts of things to overcome limited

infrastructure and things like the

banking sector. So fintex have grown

massively in Africa. We are seeing big

fintex coming such as OPE from Nigeria

that's now looking to list in the US. We

are seeing money that's valued at around

$10 billion according to our reporting.

looking at the UK for a listing. So,

Fintex have done very well on the

continent. We are expecting a few big

raises coming this year. The pipeline is

there. As I said, there is a bit of

global volatility that we are having to

look at, especially from the Middle

Eastern side. We'll talk a bit more

about Middle Eastern money in Africa in

a bit, but the pipeline is there and

people are still going for those big

raises.

>> Yeah. And you have quite a bit of

reporting about that. I think most of

the unicorns on the continent are

fintech. Is that right, Looney?

>> That is it. To be honest, I think

probably 80 to 90% at the moment FinTex.

But we do have other stories. We have

for instance move from Nigeria. at a

mobility startup and that they are just

flying really. They did a big equity

race last year, a big debt race. They've

gone into the US with autonomous fleet.

So they've been moving quite fast and as

we said that's more an e-mobility sort

of space. So there are it's fintech but

there are others also coming up

>> and in in our startups to watch list we

get into that point you just mentioned

the debt versus equity and where

startups are leaning towards for some of

their raises when you're doing your own

reporting what are you finding for

funding where is it coming from and are

you seeing evidence that more startups

are leaning towards debt versus equity

>> yes so we have seen a few more debt

raises than we've historically seen

which is an interesting shift. What we

are also seeing is regionwise we spoke a

little bit about overseas investors and

where they come from. Historically they

were from the US and so on, China to

some extent but interestingly enough

I've seen two sort of other trends in

terms of regions. Last year we saw

Middle Eastern money coming into African

startups. We saw Mumbala going into a

Egypt Egyptian e-commerce startup called

Breadfast.

Then we saw another African fund being

raised and there was more than a handful

of Japanese investors going into that

fund. The Japanese investors like to

partner with African focused funds to

try and see and learn what is going on

in terms of the continent and how the

businesses are getting managed. what is

good in terms of M&A to get into. So

they are still learning with African

investors in terms of what to invest in,

what not to invest in. But definitely

those two regions were quite interesting

for me in terms of my reporting that I

did last year.

>> Yeah, it's definitely an exciting time

to be covering it from your perspective,

but then also for a number of these

companies and investors, I guess, for

the options that are out there.

Fascinating to get your insights. Looney

Prinsoo. Looney, thanks as always. Love

to have you.

>> Definitely. Thanks, Jane.

>> And stick with us. When we come back,

we're going to hear from one of the

entrepreneurs that made our startups to

watch list for 2026. We'll be right

back.

Welcome back. Today on the podcast,

we're looking at Africa startup

ecosystem as we publish the 25 African

startups to watch in 2026. Let's hear

now from one of the companies that made

the list and one of the founders Tendai

Kitagi. He is the founder of Devtronics,

creators of the world's first solar

powered hearing aid.

>> A few years ago, I was working with

hearing impaired people. We realized

that really when we working their

batteries were running out. They

couldn't find their batteries in any

places where we're working and the

batteries are expensive. So, what we

decided to do was we said, "Okay, fine.

Let's find out a solution. How can we

make them more sustainable and make them

also participate in school? Me and my

co-founder

her name is SMA who's also hearing

impaired. So we bring death feelings to

break barriers with solar powered

hearing aids. We engaged students from

Ramosa school of the deaf where we

started to do a pilot project with them.

>> So what were the students then telling

you?

>> Interesting. Excited. It was there was

excitement cuz we' come up with a

solution. But now some of them now they

also had crazy designs cuz some of the

other kid was saying we need this

changer to be on our backpack when cuz

when we taking it to school they also

charging the batteries. So we said okay

fine we'll try to do that but we

couldn't take all the ideas cuz we also

had to find an idea which when we to

implement it so that it also becomes

more affordable. putting on a hearing

aid there's a lot of stigmatization

especially for young kids like when you

put on like some these kids they're

mixed with the ones who were here and

the ones who are hearing impaired the

first ones I think when putting on the

hearing aids and some they will just

bully them and take those hearing aids

from them and run and some will be

ashamed to put on a hearing aid so what

we did was we started to put on I say

cartoons the heroes like we put the

Batman on the hearing aid the Superman

so it looks cool you know everybody

wanted school but only to put on those

hearing aids Now, so at the same time,

we managed to remove the stigmatization

towards wearing putting on hearing aids.

>> Can you just break down because you've

brought up a few times this

affordability aspect of your products?

How do hearing aids typically how are

they priced and and how are your

products different? Okay. So, I'll give

you like the starting price of a hearing

aid excluding operational batteries is

starts at $1,000 of which is most people

they can't afford hearing aids and in

subsan Africa few than 10% of people who

need hearing aids can access them. How

do we reduce the prices? How do we make

it more affordable? So we started

sourcing materials locally and also when

we buy our materials there's no middle

room and we buy them from the suppliers

with all these like companies like all

these I would say the seven biggest

hearing aid companies or like we all buy

from the same supplier the microphone is

the same the receiver is the same

globally so they much they make so much

money maybe I would say 200% profit

margin so we said okay fine And also

some of these materials we could source

them locally and also we these things

are manufactured locally. So we said

okay fine we can also manage to reduce

the price and also make like a profit.

>> How though is it? Because the battery is

you're bringing down the cost of what

the battery would have been

traditionally.

>> Yes. And also like also now there's no

need for you to keep on buying batteries

because you are recharging the batteries

using the sun which is like our natural

resource mostly in Africa.

>> So how much then are you charging for

these products?

>> Ours comes as a complete set. Ours it

depends it varies varies from $70 to

$100 whereby ours comes with a solar

charger a hearing aid and four

rechargeable batteries. So that is for a

period of 3 years we're not going to buy

any rechargeable batteries. How has the

funding environment been? I've talked

quite extensively to a number of startup

founders who have different anecdotes

about what the conflict in the Middle

East has meant for their own raising. I

wonder from your perspective, what have

you seen in the past few months and

years?

>> I think there's also a little bit of

hesitant in investing in in African

startups. People haven't really seen the

bigger picture because Africa is going

to be we got numbers here. we will like

we've got a lot of numbers but people

haven't seen it they are a bit skeptical

the main issue is like they just treat

us as a as a place where nothing really

comes out but Africa is the future we've

got a lot of startups and if you look at

all these countries like other continent

they've reached the ceiling we've got

challenges so there's opportunities for

us to scale but venture capitalist they

don't mostly they don't see it that way

they see Africa as a place of conflict

where there's There's a lot of

bureaucracy where there's a lot of

corruption but they don't really see

they don't see like the where the wave

is going.

>> So then where do you get your funding

from then? Do you have venture capital

partners? Do you have enough? Do you

what what is that been like?

>> Mostly mostly I think we had grants.

We've been running on grants. That's

what we are. But what I was saying that

we need in terms of scaling needs, we

need funding, equipment, and a

partnership to move from thousands to

millions.

>> And maybe just one one final word from

you again, you're a part of the 25

startups to watch this year. Any final

thoughts?

>> Well, I'll just say Dronics is a is a

proof that when innovation is

disability, it doesn't just change

lives, it changes system. I invite the

world to join us in building a future

where no voice goes unheard and every

community is powered by possibility

>> and our thanks again to Tendai Kitagi

from Deftronics and of course to our

Looney Prinsloo who joined us this week

and you can read all about the 25 Africa

startups to watch on Bloomberg now. We

will put a link to that in the show

notes.

Here are some of the other stories we've

been following across the region this

week. The Ganaian government repatriated

295 of its citizens from South Africa on

Wednesday amid an ongoing wave of

anti-immigrant protest in Africa's

largest economy. The evacuation comes

amid mounting pressure on foreign

nationals in South Africa from activist

group March and March which has staged

demonstrations in several cities

demanding the removal of undocumented

migrants. And Nigeria's main opposition

party picked Atiku Abu Bubakar as its

flag bearer in January's presidential

elections, setting up a rematch of his

2023 contest with incumbent leader Bola

Tanibu. You can follow these stories

across Bloomberg platforms, including of

course the next African newsletter.

We'll put a link to that in the show

notes.

This program was produced by Adrienne

Bradley and Tiwa Adabio. Don't forget to

follow and review this show wherever you

usually get your podcasts. But for now,

I'm Jennifer Zabasa. Thanks as always

for listening.