During his recent keynote presentation at AfricArena’s Johannesburg Summit, Savant’s Managing Partner, Nick Allen was asked to share his insights into the reality of the state of deep tech in Africa. He pulled no punches. “… there are a range of challenges that we need to face, both as a continent and globally. The majority of these challenges are going to be solved through deep tech. Successful deep tech IS a continental imperative.”
If that is indeed the case, how do we go from where we are now, to where we need to be? And what exactly is the current state of deep tech in Africa? As Savant is the ONLY dedicated hardware and deep tech incubator and venture capital fund on the African continent, we hope that this article will provide insight into the power and potential of deep tech to solve Africa’s problems, and the role we all have to play.
What is deep tech?
Of late there is a renewed interest and a lot of buzz around deep tech. But what exactly is deep tech? From a Savant perspective, Nick explains, “We see a deep tech start-up as one that is built on a deep understanding of science and engineering. Deep tech start-ups are often basing their technology on multiple, different disciplines. And are solving significant global challenges.” The need for deep tech is huge. But the challenge is that deep tech is a very, very difficult thing to get right.
“Successful deep tech is a continental imperative.”
What is the reality of deep tech in Africa?
From an African perspective, the biggest players in deep tech are the Big Four players in the African start-up ecosystem, namely South Africa, Kenya, Egypt and Nigeria. But the African continent is not short of talent and potential. There are other pockets of excellence across the continent such as in Tunisia and Ghana, as evidenced by Yemaachi and Instadeep. From a thematic perspective, if we leave out fintech and logistics, the deep tech innovations that dominate in the African context are understandably clean tech, agri tech, health and biotech.
Investment into deep tech
While the majority of deep tech investments in Africa are still being done ad hoc, we are starting to see more focused commitment to deep tech, and some international players like SOSV, Plug and Play Ventures and Founders Factory have started putting money into deep tech across the continent, which is encouraging. But, is it enough?
Nick explains: “So we’ve got start-ups, and we’ve got great scientists and engineers on the continent. VCs are beginning to put money into deep tech in Africa, so everything’s going in the right direction. Right?
Unfortunately, the stats and the numbers don’t really back that up. In 2022, approximately $190 million went into deep tech in Africa (if you exclude the pure fintech component). That may sound impressive, but it’s only 3.5% of the total venture capital investment on the continent in 2022. Worse still, from an international perspective, over $60 billion went into deep tech in 2022. So, Africa represents less than 0.3% of the global deep tech economy. Clearly there is a problem. Something has to change.”
“At the moment, most deep tech companies in Africa that succeed do so despite the ecosystem – not because of it. This has to change. – Nick Allen”
So, what are the challenges and how can we solve them?
Deep tech is hard. The science is hard. The engineering is very, very difficult. To get deep tech right, you need a lot of investment over a very long period of time and this all needs to be built on top of an efficiently performing innovation ecosystem. Everything needs to work in unison to give these very challenging technologies the best chance of success. “And that is not happening in many parts of Africa.” Nick explains; “At the moment, most deep tech companies in Africa that succeed do so despite the ecosystem – not because of it. Again, that’s something that really does need to change.”
One of the ways we could improve the conditions on the continent is to increase the investments we put into our academic programs, developing research and development environments. Governments have a very, very important role to play here. As Nick said in his keynote presentation; “From an early stage, governments need to support those educational institutions, universities, and science councils that are doing the initial, fundamental research during that R&D period.” It is these entities that are going to produce the scientists and engineers that are going to run the deep tech companies of the future.
And it doesn’t just stop there. “More government support is required for those early-stage businesses when they come out of that R&D period and go into commercialisation.” Governments still have a role to play there, as the likes of TIA does in South Africa. These deep tech companies are typically still too risky for commercial capital, so governments need to play a catalytic role in both providing investment at this stage as well as incentivising commercial investment.
Another key area that is often overlooked is the level of support deep tech start-ups need. “Deep tech start-ups are founded on the science and engineering strength of their founders – often to the detriment of their commercial skills. These companies need significant, hands-on support over a long period.” This means deep tech dedicated incubators and accelerators with the skills and experience to provide commercial support, as well as a broader ecosystem bringing technical, legal and other services.
Corporates also have a very big role to play. Globally $20 billion a year is invested through corporate venture capital into deep tech. This is something that we really are not seeing on the African continent. “Corporate leaders have to realise that deep tech is solving those challenges that are going to keep them awake for a long time, they have to put money behind that.”
“We have to realise that deep tech is solving those challenges that are going to keep us awake for a long time, we have to put money behind that.”
We all have a role to play in this, Nick concludes, “those start-ups need to be properly supported. Incubators and accelerators across the continent need to be equipped. It is really important that we see more committed and focused deep tech investors across the continent, because that’s where success is going to come. Successful deep tech is a continental imperative. The rest of the world is not going to come around and solve our Africa specific problems for us. We’ve got to do it. And we have got to do this together.”
Watch Nick’s AfricArena Keynote speech on the State of Deep Tech in Africa, here: