A large number of these VC funds go to FinTech start-ups seeking to meet the needs of the continent’s largely unbanked population and Agri-Tech solutions. A report from the African Private Equity and Venture Capital Association (AVCA 2021) showed the financial sector accounted for 60% of the investments by value and nearly a third of deals by volume. This has led me to ask, how many fintech companies does Africa really need?

As an advocate of the ideology of capitalism, I believe that we, as Africans of all races and nationalities, have abandoned the hard sciences and engineering in entrepreneurship because it not only requires too much capital investment but also because it requires too much investment of our brains. This is why Africa is so far behind in technological advancements. We may be good at building apps, web-based businesses, and fintech solutions, but we don’t even seem to be trying when it comes to heavy duty innovation in the electric vehicle and smart household appliances space. We can build apps, but we cannot seem to build the smartphones on which these apps operate. The recent failure of Mara smartphones in South Africa brings a lot to light and is worthy of a case study on its own. I read a lot about manufacturing in Rwanda, but where was the phone designed? Where lies the key intellect and patents?

Today’s startup entrepreneurs have been taught that ‘Built to flip’ – starting a venture with the intention of selling it within three to five years, is the way to go. Built to flip certainly has a place in developed, first world countries and I suppose in the tech space in Africa too, but what impact does it have on the mindset of aspiring pioneers in the hard engineering fields from developing and emerging economies where such undertakings require time to do the proper research and development?

In the tech world, viable businesses can be built with very little capital. The Internet allows creatives to build startups literally over a weekend. In so-called “weekenders,” Web-based businesses can be built from concept to launch to revenue overnight. The Internet has played a significant role in this acceleration. It is no surprise VCs see the tech space as the goose that lays the golden egg.

My favourite quote of 2022 comes from Piet Viljoen, Portfolio Manager at Counterpoint Asset Management, who in an opinion piece for BusinessLive wrote “Not to speak of the venture capital (VC) world, where easy money has caused valuations in early-round financings to explode. A unicorn is an imaginary animal, “scarce” to the point of being non-existent in the real world. In the VC world, a unicorn is an early-stage business with a valuation of more than $1bn. Today, after the deluge of cheap money, in the cave of the venture capitalists there are more “unicorns” than donkeys.

In a country, speaking from a South African perspective, that has record unemployment levels, bootstrapping a business is a luxury reserved for those who had good paying corporate jobs and have savings. There is also a lack of formal angel investor networks where pre-revenue startups can raise capital from. Add to this, most VCs have criteria that automatically disqualify the majority of startups from accessing funding from them. The less said about government funding agencies, the better.

As part of an ongoing solution, we need to relaunch Science, Technology, Engineering & Mathematics (STEM) focused high school and tertiary competitions, give tax credits to companies that are focused on innovation and decrease the costs and entry barriers for studying key STEM courses.

Now, with all that being said, my biggest concern for the African Renaissance is that there seems to be little to no hope for the entrepreneurially ambitious mechanical, electrical, aeronautical and electronics engineers that our institutions of higher education churn out every year. We are blessed with academic acumen in these hard sciences and engineering fields yet no effort is made to get Africa moving in the direction of the first world countries. We can all be in awe of the achievements of Elon Musk and claim him as our own, but without identifying the innovators and investing in them early, Africa will forever be an importer and never a designer, manufacturer, and exporter of the next Tesla.

Loyiso Mpeta is a certificated engineer, startup entrepreneur and Hedge Fund Manager