Fintech has traditionally been the darling of venture capital in Africa, receiving almost half of the investments in 2022. On the other hand, entertainment tech startups in the continent have historically struggled to attract consistent venture capital investments.
That's why Sony Ventures, a unit of Sony Corporation, is charting a different course by starting its African journey with entertainment-based startups. Through the Sony Innovation Fund: Africa (SIF: AF), a fund that will support the growth of entertainment businesses in Africa, the Tokyo multinational conglomerate is investing $10 million to support early-stage startups in gaming, music, film and content distribution.
According to Partech Africa, entertainment startups secured $42 million in 2022, accounting for a mere 0.9% of the continent's total venture capital investments. However, gaming, music, film, and content distribution are burgeoning fields with immense potential, and Sony is eager to harness this.
For instance, the gaming market in Sub-Saharan Africa is projected to surpass $1 billion by 2024, according to data from industry experts. Similarly, the video-on-demand sector is on a rapid growth trajectory, with subscriptions set to reach 13.7 million in 2027, and revenues tripling from $623 million in 2021 to $2 billion in 2027. The music industry is also thriving, attracting global record labels due to the growing popularity of indigenous genres like Afrobeats.
It will also support the expansion of the African entertainment industry by offering technologies, partnerships with creators, intellectual property and content, and marketing support, among other things.
Sony emphasized that the fund's investment strategy isn't limited to seed and early-stage companies; they also plan to offer follow-on investments. While there's no specific timeline for deploying the $10 million or a set number of startups to invest in, ticket sizes are expected to range from $250,000 to $1 million.
Sony Innovation Fund: Africa will begin its operations in South Africa, Kenya, Nigeria, and Ghana, with potential expansion plans for the future.
In addition to its internal efforts, Sony has also entered into a collaboration agreement with the global development institution, International Finance Corporation (IFC), to provide financial support and also leverage both parties' strengths to foster the growth of the African entertainment industry.