Three strategies for Western Mobile tech investors in Africa

Africa’s growth and the lack of local technology incumbents have generated the world’s highest start-up rate, especially in mobile technology. Early investors that want to put their money in Africa’s mobile tech companies before someone else does, basically have three strategies, Harvard Business Review reports.

“The weakness of conventional forms of infrastructure in Africa has put a premium on all things mobile and created an infusion of high-tech solutions into low-income markets”, the reporters state, mentioning success stories of M-Kopa (Kenya) and mPedigree in Ghana. Successful mobile tech start-ups in Africa are popular among western investors, as they will have a first-mover advantage and the potential to dominate their market. It is no surprise that early investors are eager to jump on the African bandwagon, but the big question is: where to invest?

The Harvard Business Review article identifies three strategies. The first is to go with current local initiatives. That can be risky: it may be hard to estimate the commercial potential of such ventures, because there aren’t comparable business models elsewhere.
The second strategy for early investors is to spread their bets more than usual, by joining a business angel network, incubator facilities and venture-funding vehicles. The third strategy Western investors also increasingly use is to focus more on the entrepreneurs themselves than on the business models or technologies. When you trust the entrepreneur and his skills, you may be on to a good investment.

Further reading on hbr.org

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