Source: Tage Kene-Okafor/ TechCrunch
Sony Group announced that it has established Sony Innovation Fund: Africa (SIF: AF), a program that will support the growth of entertainment businesses in Africa. Appropriately, the Tokyo multinational conglomerate, through Sony Ventures Corporation (SVC), has earmarked $10 million for early-stage startups in gaming, music, film and content distribution.
Sony Ventures’s latest endeavor to support technology businesses across markets and stages is this fund focused on African entertainment startups. Last year, SVC completed the first closing of Sony Innovation Fund 3 at $215 million to back all stages of emerging technology companies. The subsidiary manages all of Sony’s venture investment activities through SIF3, Sony Innovation Fund (SIF); Sony Innovation Growth Fund by IGV, a joint venture with Daiwa Capital Holdings; and Sony Innovation Fund: Environment.
The Japanese tech giant’s venture arm has made more than 100 investments in consumer and enterprise-facing businesses across various sectors like entertainment, robotics, AI, mobility, fintech, healthcare, logistics and SaaS from all these funds.
In Africa, fintech remains the most funded sector, attracting almost half of the venture capital coming into the continent last year. And though other sectors such as logistics, healthcare and mobility are top of mind for local and global investors keen on African tech, it’s entertainment, which is often overlooked, that Sony Ventures is choosing to start with for its first foray into Africa.
Gen Tsuchikawa, CEO of Sony Ventures, told TechCrunch that although the Japanese behemoth established the Sony Innovation Fund in 2016 to invest in ventures across various business fields, it remains a creative entertainment and technology company whose mission is to fill the world with sentiment through the power of creativity and technology.
“The entertainment field has been a key area of focus for Sony Innovation Fund since the beginning and will continue to be. Africa, in particular, has a vibrant community of creators and entrepreneurs looking to invent new ways to enhance entertainment experiences for audiences and that propelled Sony to establish SIF: AF,” he added.
Sony’s Africa-focused fund will serve as a much-needed boost to the continent’s entertainment tech startups, which have struggled to receive consistent venture capital over the years. According to Partech Africa, in 2022, these startups received $42 million, representing 0.9% of Africa’s total venture capital investments despite the enormous potential to be unlocked in gaming, music, movie and content distributions, critical areas within the industry that Sony is particular about.
Take gaming, for instance. Per data from games market data providers Newzoo and Carry1st, a South African publisher of games and digital content, the gaming market in Sub-Saharan Africa is set to surpass $1 billion by 2024.
Similarly, video-on-demand subscriptions in Africa are projected to hit 13.7 million in 2027, up from 4.89 million at the end of 2021, with revenues tripling from $623 million in 2021 to $2 billion in 2027. Netflix, which this April said it had invested €160 million in film content production in Africa since 2016, and Amazon Prime face competition from other streaming platforms customizing for African audiences such as Showmax, Canal+, Disney+ and ROK in the race to capture market share in the video streaming market. On the other hand, the music industry is bolstered by the widespread streaming of indigenous genres such as Afrobeats and has expanded to the point where it’s attracting global record labels to sign its local artists.
“We are exploring investments in these areas because we see great potential and exciting creativity from the creators, entrepreneurs and teams in Africa, and we want to support that. There is also growing adoption of technology overall in these areas, which we are excited about,” Tsuchikawa commented.
“Since Sony’s entertainment business group is exploring and supporting young talented creators in Africa, this fund will also try to support those creators and the growth of entertainment business in Africa in various ways such as providing technologies, collaborating with creators, intellectual property, and contents, marketing support, and others which Sony can contribute.”
Tsuchikawa stated that in addition to the fund’s seed and early-stage investment strategy, it will offer follow-on investments to its portfolio companies. There’s no set time frame to deploy the $10 million or a set number of startups the fund plans to invest in; however, Sony Innovation Fund: Africa expects its ticket sizes to range from $250,000 to $1 million. “We have initiated due diligence on a few startups, but I can’t share any details at this time,” answered Tsuchikawa when asked if Sony Innovation Fund: Africa has made some investments yet and if certain startups are on its radar. “We plan to start our work with South Africa, Kenya, Nigeria and Ghana, but there is a possibility of expanding the scope of the project in the future.”
Sony Ventures has an office in all markets where it has invested through its funds: Japan, India, Israel, Europe and the U.S. In Africa’s case, it’ll take a less direct approach. According to Tsuchikawa, the fund will initially be supported by the Sony Ventures team in Europe; however, the company is currently working to hire a full-time member on the continent who can take on the venture capital sourcing function.
As with most corporate venture capital structures, Sony Innovation Fund, over the years, has supported the growth of its portfolio companies by providing opportunities for collaboration, ranging from the provision of Sony-owned technologies to joint development and business alliances. Approximately 40% of Sony Innovation Funds portfolio companies have strategically partnered with Sony. Similarly, Tsuchikawa said the fund will promote the possibility of its African portfolio companies collaborating with the entertainment business group of the Sony Group depending on the stage and timing of the business, connecting them with its extensive network of resources, technical expertise and industry insights.
Meanwhile, Sony has concluded a collaboration agreement with the International Finance Corporation (IFC), the largest global development institution focused on the private sector actively investing in emerging markets, including Africa. In addition to financial investment, this collaboration will support the growth of the African entertainment industry by leveraging both parties’ strengths, according to Toshimoto Mitomo, the executive vice president of Sony Group Corporation.
“Sony Group has been fostering next-generation technologies and startups and promoting open innovation through its corporate venture capital activities. Through the activities of Sony Innovation Fund: Africa, we hope to accelerate the growth of the African entertainment industry and contribute to the progress and development of the region by providing opportunities for collaboration with the entertainment businesses within the Group,” Mitomo added.
Source: Tage Kene-Okafor/ TechCrunch
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