Amazon Web Services (AWS) played an instrumental role in helping to create most of Africa’s seven unicorn start-ups, by helping them build a strong foundation, which created sustainability and scaling potential.

This is according to Henri Zietsman, start-up business development lead at AWS, speaking yesterday at the Southern African Venture Capital and Private Equity Association Venture Capital virtual conference.

Discussing Africa’s venture capital (VC) landscape, Zietsman noted the continent has potential to be an innovation and technology powerhouse, with VC investments in the tech sector expected to climb sharply over the next few years.

He pointed out the on-demand cloud computing services provider played a crucial role in shaping the destiny of some of Africa’s unicorns and high-growth start-ups, by helping them solve emerging market challenges. These include unstable internet, low bank penetration, limited smartphone availability, lack of access to education and healthcare, informal to formal transportation, and mailing logistics in areas with no established postal systems.

Zietsman said Amazon provided funding and scaling support through various SME programmes and initiatives offered on the continent, and partnered with start-ups to provide them with cloud computing products and services to accelerate their offerings.

According to Investopedia, a “unicorn” is used in the VC industry to describe a privately-held start-up with a value of over $1 billion.

Africa is seeing a rush of tech sector funding, with some start-ups already identified as likely to become future unicorns on the continent.

Zietsman pointed out the launch of the AWS data centre in Cape Town last April resulted in a hive of activity in Africa’s cloud computing space and created infinite opportunities for the continent’s start-ups.

“The new region launched by AWS right here in Cape Town means start-ups now have access to up to $100 000 for funding support and access to markets across Africa .

“We are also creating potential for start-ups to have access to venture capitalists, accelerators and investors. As a result, we have seen the creation of the likes of some of the seven new unicorns across Africa. These include Flutterway, DataProphet, Aerobotics, Luno, Pineapple Insurance... and I could go on for hours.”

At the time of the opening of the new region, AWS said the data centre will enable developers, start-ups and enterprises, as well as government, education and non-profit organisations, to run their applications and serve end-users in Africa, with lower latency, and leverage advanced AWS technologies to drive innovation.

Artificial intelligence (AI) firm DataProphet is among those leveraging AWS technology to scale its services. The AI-as-a-service start-up previously told ITWeb the AWS data centre helped it provide customers with improved efficiencies, high data security, increased response times and regulatory compliance capabilities.

Today, the Cape Town-based company is on the list of African unicorns, alongside local tech start-ups SweepSouth, Luno, Jumia, Flutterwave and Andela.

Luno is a Bitcoin exchange with operations in SA, Singapore, Nigeria, Indonesia and Malaysia. It leverages AWS to help start-ups develop Bitcoin products and services, and also joined the AWS Activate programme – which it says was integral in getting its business off the ground.

De-risking investment rounds

In 2019, the Amazon subsidiary launched the AWS Equity Equivalent Investment Programme (EEIP) in SA, as part of its broad-based black economic empowerment programme to support black-owned local small IT businesses.

According to the company, EEIPs provide multinational companies an opportunity to take part in local societal development and contribute towards economic advancement and inclusion of black people and black-owned businesses in SA.

“There has never been a better time to be a start-up in Africa….You can basically sell directly into the global economy from anywhere on the continent.

“The key is that we’ve met these start-ups very early and the activate programme is only ‘step one’ where we connect businesses to the investor. ‘Step two’ is that we link them to access to markets. And what we have also introduced is the ability to de-risk the investment rounds for potential investors, by conducting due diligence with Series C funded start-ups, or pre-Series C funded start-ups, though [guidance of] a 62-page document which looks purely at the start-ups’ scale of cost-efficiencies, compliance and other factors,” continued Zietsman.

According to the sixth edition of the annual African Tech Start-ups Funding Report 2020 by research portal Disrupt Africa, 2020 was a record year for investment in the African tech start-up ecosystem, with funding passing $700 million for the first time.

AWS recently introduced a platform to connect its start-up network to enterprises and blue-chip companies that are already working with the cloud computing giant, said Zietsman.

Last week, AWS introduced AWS Start-up Loft Accelerator, an early-stage start-up accelerator that provides a 10-week programme to help entrepreneurs in the EMEA region scale their businesses.