The very first African Google meeting which was held on Wednesday, 6th of October 2021, brought a lot of goodies with it as Google releveled plans to invest up to $50 million in African early- and growth-stage startups via its Africa Investment Fund, ramping up efforts to support more businesses on the continent. This has also revealed plans to land another submarine broadband cable that will run across Nigeria to other five African countries and connect them to Europe. The investment seed which will be spread over five years is to support Africa’s digital transformation. The investment focuses on enabling fast, affordable internet access for more Africans; building helpful products; supporting entrepreneurship and small businesses; and helping nonprofits to improve lives across Africa.
Sundar Pichai, CEO of Google, announced the company’s intention to invest $1 billion over the next five years in technology-led initiatives in Africa. Selected companies will be given access to Google employees’ network, and technologies to assist them in developing products. The new investment fund is equity-based, and it represents a significant shift in Google’s approach to investing in African startups.
The new fund is part of a larger investment in Africa by the US tech giant over a five-year period, which CEO Sundar Pichai described as “supporting the continent’s digital transformation.” These initiatives range from improved connectivity via Google’s Equiano subsea cable to investments in small businesses and startups. Google had previously fulfilled its obligations in the latter through its Google for Startups Accelerator Africa program and the recently launched Black Founders Fund.
Startups like Twiga, Paystack, and Piggyvest collectively, these 80+ startups, have been accepted by Google for Startups Accelerator Africa and have raised over $100 million in venture capital. On the other hand, the Black Founders Fund gives non-dilutive cash awards to black-led startups in three regions. In the U.S, the Black Founders Fund operates a $5 million fund, while in Africa it operates a $3 million fund; and in Europe, a $2 million fund.
So far, 50 startups have been selected to participate in the Africa program starting on October 13 of 2021. Each will receive up to $100,000 (41,082,000) in equity-free capital along with credits from Google Cloud, Google.org ads grants, and additional support.
According to Google, out of the 50 startups, 40% are led by women, representing nine countries and 12 sectors. Nitin Gajria, the managing director of Sub-Saharan Africa, Google, during a conference call highlighted why the internet behemoth created the fund, stating “There is a significant gap in terms of access to funding. Some groups do not have access to funding as much as other groups. We’ve seen that with black and female-founded startups. And our effort with the Black Founders Fund is to help close that gap to some extent.”
“We’ve seen more investment rounds into tech startups last year than ever before.” “I am convinced that no one is better placed to solve Africa’s biggest problems than Africa’s young developers and startup founders,” he added.
However, unlike both initiatives, the newly announced $50 million Africa Investment Fund will see Google take equity in high-growth African startups in exchange for varying check sizes.
“Think of it as Google bringing venture capital into the continent” – Gajria.
According to the fund’s investment thesis, the managing director stated that the Africa Investment Fund has no preference for specific sectors or countries. He adds that the fund could function similarly to the Google for Startups Accelerator program.
Despite the fact that Africa has a Big Four (Nigeria, Kenya, South Africa, and Egypt) in terms of startup and venture capital activity on the continent, the accelerator has made a point of accepting applications from startups in less-funded and underserved regions. This includes countries like Algeria, Botswana, Cameroon, Ivory Coast, Ethiopia, Ghana, Morocco, Rwanda, Senegal, Tanzania, Tunisia, Uganda, and Zimbabwe.
We are not limiting ourselves to specific verticals. “We are concentrating our efforts on investments where we believe Google can add value,” Gajria explained. “If founders are developing interesting products that address real-world problems in Africa, that would fall squarely within our investment thesis.”
For startups who get investments from the Africa Investment fund, Google says they will have access to its employees, network, and technologies. When asked when Google will make its first set of investments, Gajria said, “We are in advanced stages of various discussions, nothing that I can talk about more specifically at this point. But I’m hopeful we can come back with more information soon.”
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