The Future of African Tech Depends on Corporates as much as VC's

PIC CAPTION: Colin Iles and Christophe Viaurnaud, at the Johannesburg AWS Summit 2025. Image: Supplied / AWS

This week at the AWS Summit in Johannesburg, I joined Colin Iles for a fireside chat on the state of African tech. One point became clear: Africa does not suffer from a lack of startups. It suffers from a lack of corporate courage.

For all the progress made in the past decade, the gap between the potential of African founders and the flow of capital into their companies remains striking. And unless African corporates step up, the continent will continue sprinting on a track the rest of the world barely notices.

The State of African Venture

The numbers tell the story. In 2017, African startups raised around $300 million, barely a rounding error globally. By 2021, that figure rocketed to $5 billion, before cooling to about $3 billion during the so-called VC winter.

On one hand, that’s the fastest growth rate of any venture market in the world. On the other, it still represents only 0.6% of global capital flows. In short: Africa is sprinting, but the global race is far from even.

This is not because of a shortage of ideas or talent. AfricArena tracks hundreds of high-quality startups across the continent every year. The issue is scale: too little capital, too little growth support, too little long-term engagement.

The Corporate Gap

Globally, corporate venturing has become mainstream. According to Global Corporate Venturing, 72% of S&P 500 companies are engaged in CVC activity, and those that are most active significantly outperform peers on revenue growth, share price, and cash flow.

In Africa, by contrast, you can count the genuine corporate venturing units on two hands. Most corporate–startup engagement remains limited to CSR-styled initiatives: a hackathon here, a sponsorship there, a logo on a pitch competition. It makes for nice PR, but it is not strategy.

And that’s a mistake, because no one is better positioned to back African startups than African corporates themselves. They have deep market knowledge, customer access, and balance sheets large enough to matter.

As I often put it: that’s like testing the waters with a teaspoon when you have an ocean at your disposal.

The Missed Opportunity

The evidence is clear: the best outcomes come when corporates get involved early, not just at the acquisition stage.

Take InstaDeep, a Tunisian-born AI company. From its earliest years it partnered with corporates like Siemens, which used InstaDeep’s algorithms to improve mobility planning, and BioNTech, which leveraged its AI to accelerate drug discovery and vaccine design. For Siemens, the collaboration meant faster, cheaper innovation than internal R&D could deliver. For BioNTech, it proved critical in the Covid-19 vaccine race, and made them the natural acquirer.

There are African corporates beginning to follow this model. Old Mutual’s Next176 venture studio backs startups from inception, co-building products with entrepreneurs rather than investing later. In Kenya, Safaricom’s Spark Fund has not only invested in fintech startups but also plugged them into the vast M-Pesa ecosystem, a distribution advantage no VC could replicate.

But these remain exceptions. Too often, corporates only show up at the finish line. Consider iKhokha: during its growth years, it was Crossfin and their backers who took the risk. No bank stepped in. So when Nedbank eventually acquired iKhokha, it had to pay a premium for a business it could have partnered with and shaped from the start.

AfricArena’s research shows the scale of the opportunity: if just 1% of the equity value of Africa’s top 250 corporates were redeployed into startups, it would inject more than $5.6 billion into the ecosystem. That’s more than all annual VC inflows in most years.

And capital is only one side of the equation. What startups often value even more are the things corporates can uniquely provide: distribution channels, customer bases, data, infrastructure, and credibility..”

The Case for Action

The logic is simple. Traditional R&D is slow, expensive, and uncertain. Startups, on the other hand, are agile, customer-focused, and can move in weeks, not years. By partnering with startups, corporates get early access to innovation, new revenue streams, and the ability to de-risk future acquisitions.

Globally, the evidence shows that corporates who engage in venturing don’t just innovate faster, they perform better financially. For African corporates, the choice is stark: either join startups early and help shape the industries of tomorrow, or wait until disruption forces their hand at a much higher cost.

A Call to Action

The future of African tech will not be built on venture capital alone. VCs are important, but they are not enough. Corporates must commit, not in one-off gestures, but through structured strategies:

• Allocating a percentage of profits or equity to CVC arms.

• Building real open innovation programs, not just marketing exercises.

• Partnering with startups for distribution, data, and joint product development.

At AfricArena, our role is to build these bridges. Every year, we convene startups, investors, and corporates across four continents to accelerate this collaboration. The results are clear: when corporates engage meaningfully, startups scale faster, and corporates grow stronger.

The real question is not whether African corporates can afford to back startups. The real question is whether they can afford not to.

Africa’s next wave of billion-dollar companies will emerge with or without corporate support. The choice for corporates is simple: be passengers, or be drivers.

Christophe Viarnaud, CEO of www.methys.com