A year after a group of venture capitalists partnered to form Venture Capital for Africa (VC4Africa), their move to back a lab in Somaliland comes as a sign that tech entrepreneur funding in Africa is moving beyond traditional hubs like Johannesburg, Nairobi, Lagos and Accra.
"We see ventures coming online in Congo, Gabon, Democratic Republic of Congo, Mali, Southern Sudan and Somaliland; it shows there is an entrepreneurial appetite on every corner of the continent," said Ben White, VC4Africa founder.
The group is backing Somaliland's first software incubation and testing labs. VC4Africa matches entrepreneurs with VCs. Entrepreneurs register their apps and businesses with VC4Africa to receive feedback and potential funding from venture capitalists within the organization. VCs working with VC4Africa include eVa Fund, Acumen Fund, Ashoka Change Makers, East Africa Capital Fund and In Return Capital.
Somaliland and its capital, Hargeisais, are relatively peaceful relative to the more famous war-torn Somalia and its capital, Mogadishu. Because of the similarity in names, Somaliland is often mistaken as hostile and unstable, but the country is served by fiber optic cable and telecom costs are relatively affordable compared to other countries and major cities such as Nairobi and Addis Ababa.
"The region is quite stable, energy and Internet provision are above average and you have a young and graduated workforce which is hungry to prove their skills," said Saskia Reus, head of international partnerships at VC4Africa.
The lab in Boorama, Somaliland, is being formed in partnership with ExtendedBits, a local software company. VC4Africa has already connected the company with RLabs in South Africa, to allow developers in the two companies to exchange ideas and improve on software and testing.
"There is tech talent in Somaliland and graduates are quick to learn principles of software testing," said Hassan Giire, founder of ExtendedBits. "Somaliland has one of the cheapest telecom rates and the infrastructure is good."
Giire said the company is ready to deliver high quality testing and enhance on-the job training in order to attract bigger outsourcing contracts in Europe.