Chinese companies are gradually strengthening their positions in Africa's technology sector, starting with the supply of phones and telecommunications equipment, then moving to fintech, and currently implementing artificial intelligence models used by local startups. At the same time, American private capital investment is decreasing, and Lexi Novitske, General Partner at Norrsken22, believes that US investors will regret this.
Novitske moved to Nigeria in 2012 and has been investing from Lagos since then. Norrsken22, a growth fund operating across Africa and supported by founders of Scandinavian tech companies, including creators of Klarna, Skype, and Minecraft, closed its debut fund of $205 million in 2023. The fund is currently about halfway through distributing this capital, and no exits have been realized yet.
In an episode of TechCentral Show, she develops a thesis previously covered by TechCentral: African startups are increasingly relying on Chinese AI models, such as Alibaba's Qwen, because they are more accessible and cheaper. Furthermore, there is a risk that the US may lose both the young, digitally focused market and access to its data.
In an interview with TechCentral editor Duncan McLeod, Novitske also touches upon several topics. She discusses changes in the Nigerian startup environment since beginning her work as a business angel. The unpredictable regulation and shortage of highly skilled personnel are also discussed as more serious obstacles for Nigerian founders than power outages.
Additionally, she explains how China-backed OPay and PalmPay captured the Nigerian fintech market by absorbing years of losses, which is causing concern among regulators. The discussion covers why the Silicon Valley AI boom is diverting venture capital away from Africa and when, in her prediction, it might return. It also examines the current prospects of Egypt and South Africa, as well as the likelihood of Nigeria following suit.
Finally, the importance of Optasia's re-subscription to the JSE for Johannesburg is discussed, along with the reasons why major African fintech companies are seeking opportunities in New York, London, and Hong Kong, and how one or two successful projects could provide a full fund return.