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The AI sector generated only 2.5 percent of the nearly $700 million raised by African entrepreneurs in 2020. This demonstrates that the sector has a low level of investor preference. In comparison, the current VC favorite, fintech, received more than 24 percent (a quarter) of total investment.
FREMONT, CA: Artificial intelligence (AI) has grown significantly in recent decades, infiltrating every level of the digital experience. Investment in AI startups increased as the industry grew.
According to recent research, AI startups got a total of more than $20 billion in funding during the second quarter of 2021. This is more than double the $8 billion raised internationally in the second quarter of the previous year.
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Despite global progress, the spread of artificial intelligence in Africa is still in its infancy due to a variety of issues, including finance.
The AI sector generated only 2.5 percent of the nearly $700 million raised by African entrepreneurs in 2020. This demonstrates that the sector has a low level of investor preference. In comparison, the current VC favorite, fintech, received more than 24 percent (a quarter) of total investment.
AI Growth in Africa
Even with low funding, activity in the sector, like everywhere else in the world, is slowly beginning to pick up. The creation of learning algorithms like deep learning, chatbots, and neural networks, which allow the software to learn from experience and upgrade themselves, has made AI increasingly important.
These breakthroughs, together with fresh financing, are gradually removing the veil of the AI Sector.
Previously, there was financing here and there and the presence of many pioneering firms like South Africa's BrandsEye and Egypt's Affectiva (2009). However, there was no considerable growth to indicate the sector's rise beyond these.
AI had a landmark year on the continent in 2019, with funding into the sector increasing dramatically from previous years. The sector raised $11.27 million, a 223 percent increase over the $3.6 million raised in 2018.
2020 was even better, with funding increasing to $11.63 million, according to reports. Notably, four firms raised more than a million dollars, with an average of $1,162,700 raised.
Individual startups closing substantial rounds of funding continue to fuel funding in the African AI area. Tunisia's Instadeep (US$7 million) closed 62 percent of total investment in 2019, while SA's DataProphet's $6 million fundraisings accounted for more than half of the capital attracted to the continent in 2020.
Furthermore, investment in AI is not evenly distributed across the continent, with certain nations, such as South Africa, receiving more AI funding than others.
Aside from DataProphet, SA has two more major rounds in 2020, with inQuba raising an undisclosed amount and LightWare raising US$1.5 million-plus one additional smaller raise.
In terms of AI funding, this puts South Africa well ahead of the rest of the continent.
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