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Table of Contents Introduction..............................................................................................................1 I.Leveraging Deeptech Innovation for Africa’s Transformation..........................2 II.From SMEs to Innovation-Driven and Deeptech-Driven Enterprises..............4 III.MIT Stakeholder Framework...............................................................................5 IV. Stakeholder Analysis Opportunities and Recommendations..................................................................6 i. Entrepreneurs ii. Risk Capital iii. Governments & SSOs iv. Universities v. Corporations V. Promoting Deeptech Innovation Across Africa: Awareness, Structural Barriers, and Decentralization ......................................12 VI. Conclusion........................................................................................................16 VII. Acknowledgment.............................................................................................17 Contributors...........................................................................................................18 References.............................................................................................................19
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Introduction
Embracing deeptech innovation – innovation grounded in advances at the frontier of science and technology – in Africa has the potential to drive sustainable economic growth, improve living standards, and bring stability and resilience. As the wellspring of new solutions, deeptech has the power to address unique challenges faced across the Continent in areas like energy, water, healthcare, infrastructure and the multi-faceted problems of climate change. It holds within it an opportunity for countries across Africa to participate actively in shaping their own future, leveraging science and technology to drive prosperity and allowing for greater global competitiveness. In spite of its promise, deeptech innovation continues to be developed at a vanishingly small scale in comparison to the exponential growth of digital innovation across Africa. While this is to be expected given the significant barriers to participation in deeptech including talent, risk capital and infrastructure, to ignore the opportunity it presents, is to consign the continent to continued dependence on other nations to develop, and prosper from, solutions to their greatest challenges. To understand in more detail, the barriers to thriving deeptech innovation ecosystems - and to gain deeper insight into what needs to happen to see an increase in the commercialization of scientific research and development - the Legatum Center for Development and Entrepreneurship at MIT worked in partnership with Open Start Up International’s deeptech BRAIN Program to host a roundtable conversation in Tunisia in October 2023. The BRAIN Deeptech Thought Leadership roundtable included over 40 innovation ecosystem stakeholders from 17 countries across Africa, with funding from Digital Africa, Africa Grow, IFC, and the US Embassy in Tunisia, and the support of leading African VC fund Africinvest and storied Tunisian deeptech venture – Instadeep.
The 2-day event was structured around 6 panel discussions, each followed by roundtable discussions centered around the preceding panel topic. Panel discussions were carefully curated to lay the foundation for the small group discussions that followed. The panel and roundtable discussions were structured around 3 main themes:
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Mapping the Pan-African Innovation Landscape
a. Entrepreneurs’ perspective b. Pan-African Investment in Deeptech
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Fostering Deeptech Innovation in Africa
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Building a Pan-African Deeptech Ecosystem
a. Corporate Role in Driving Deeptech, R&D, and Open Innovation b. Role of Universvities in Innovation and Deeptech Research
a. Government Policies and Deeptech Innovation b. Ideation Session to Identify Deeptech EcosystemBuilding Initiatives
This white paper serves as the summary of the main discussions and conversations from ecosystem builders, entrepreneurs, researchers, policy experts, advocates, and investors derived from the vibrant discussions held at the roundtable discussion. This initiative is also followed by a more in-depth analysis and mapping of the African Deeptech Ecosystem developed by Briter Bridges in partnership with the BRAIN program. To access this study, please access the report here.
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I. Leveraging Deeptech Innovation for Africa’s Transformation In an era marked by increasing global connectivity and technological advancements, Africa is in the early phases of a transformative journey driven by untapped opportunities and solutions generated by its ever-growing communities of talented young people supported by rapidly evolving innovation ecosystems. Often hailed for its rich cultural diversity and abundant natural resources, Africa is at a crucial point in its history, where leveraging its human capital to develop deeptech solutions—technologies grounded in cutting-edge science and engineering— is not just an option, but a necessity for sustainable prosperity and global competitiveness. If Africa can establish a future characterized by technological sophistication in both the digital-tech domain and in deeptech, then the opportunities for transformation and responses to the challenges posed by population growth, climate change, and political instability are significant. Moreover, the balance between the digital domain and the deeptech domain will continue to shift: according to the Briter Bridges Deeptech Ecosystem Study Report shared in early 2024, more than 300 active African deeptech start-ups have raised $3 billion in funding over the last decade, and more than a third of funding to start-ups in Africa went to deeptech in 2023. Yet, the African deeptech trajectory remains largely underexplored, likely under-resourced and widely under appreciated. The current status of deeptech in Africa presents a complex landscape; blending extensive macroopportunities with complex country-by-country variations and continent-wide challenges to pursuing deeptech innovation.
At the macro-level, there is a significant momentum toward diversified economic development away from reliance on single commodity exports. Investments in Africa are on the rise, with continued investments into traditional sectors like banking, infrastructure, and oil & gas, as well as a growing focus on domestic tech-backed sectors. According to the 2022 Venture Capital in Africa Report, the financial sector dominated fundraising deals with about 32% in volume, followed by information technology with 16%. On the other hand, despite their importance, healthcare and energy sectors attracted less than 5% of the investment. Similarly, between 2015 and 2023, deeptech ventures in Africa witnessed an increase in total funding value, from $86 million to $1.2 billion. Deeptech investments have significantly increased their share of venture funding claiming a stable 20% share of venture capital funding since 2019 (a ratio akin to European VC), which is a notable increase from just 10% a decade ago, signaling that these technologies have come into their own as an asset class but with growth continuing to be slow given the importance of deeptech solutions to the continent’s challenges. The continent-wide picture hides significant countryby-country variations: it is essential to recognize the diverse trajectories across the 54 countries in Africa with varying levels of economic growth, investments in infrastructure, and technological development. Examples such as Debo Engineering showcase the continent’s prowess; an Ethiopian deeptech startup founded in 2018 that specializes in early-crop disease detection solutions, earning recognition as one of the top 50 most impactful African startups in 2020 and represented Ethiopia at the World Summit Awards that same year. Another notable success story is Instadeep, a Tunisian deeptech startup established in 2014, gaining prominence in artificial intelligence (AI), biotech, and other deeptech fields.
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Instadeep was acquired by BioNTech in 2023, marking one of the largest acquisitions in Africa and globally. This acquisition aimed to bolster BioNTech’s pioneering position in AI-powered drug discovery, design, and development. Against this backdrop of innovation and investment, Africa faces challenges when it comes to pursuing a deeptech agenda. The MIT approach to the development of deeptech solutions is grounded in building strong innovation ecosystems that support deeptech innovators and entrepreneurs. More specifically, the MIT I-Cap and E-Cap Frameworks, emphasizing Innovation Capacity (I-Cap) and Entrepreneurial Capacity (E-Cap), provide a strategic approach for developing robust innovation ecosystems, and highlight five key elements crucial for supporting deeptech: human capital, funding, infrastructure, demand, and culture and incentives (Murray & Budden, 2018). Building I-Cap involves nurturing a deep understanding and mastery of leading-edge science and technology. It requires the development of specialized skills, research facilities, and knowledgesharing platforms. This is particularly crucial for deeptech, as it relies heavily on cutting-edge scientific discoveries and technological advancements. On the other hand, E-Cap is about cultivating an environment where these technological innovations can be effectively translated into market-ready solutions. This includes fostering entrepreneurial skills, providing access to capital, and creating networks that link innovators with industry and markets. The real challenge for deeptech in Africa lies in harmonizing these two capacities, and striking a balance between advancing scientific and technological frontiers (I-Cap) while simultaneously nurturing a conducive entrepreneurial ecosystem (E-Cap) that can support and commercialize these innovations. Specialization, driven by a focus on comparative advantage, ensures that resources are not spread too thinly and that each region or country can develop niche areas of expertise.
Graph 1: ICAP ECAP Framework © Murray, F. & Budden, P. (2017)
This approach not only maximizes the impact of limited resources but also creates unique value propositions for each ecosystem within the continent. To do so, the five dimensions of the framework need to be studied individually for a clear view of the current state of the ecosystem and for a strategic approach to furthering it.
Human Capital:
Africa’s demographic dividend, with its large working-age population, is a significant asset. To harness this, improving education and employment is critical. Building skills and fostering knowledge creation are central to enhancing the continent’s human capital, aligning with the e-cap aspect of the framework.
Funding:
Addressing deeptech’s funding needs involves leveraging a powerful combination of local investment, international venture capital, multilateral financial sources, and effective aid funding. Aligning funding strategies with both I-Cap and E-Cap ensures diverse and sustainable financial support for deeptech ventures.
Infrastructure:
The infrastructure, both physical and digital, needs development to support the high demand for innovative solutions. Enhancing this infrastructure is a crucial aspect of the I-Cap dimension, facilitating the growth of deeptech initiatives.
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Demand:
Cultivating a market for deeptech products and services in Africa is essential. Governments and corporations can foster this demand through supportive policies and procurement, resonating with the e-cap aspect of the framework.
Culture and Incentives:
Policy challenges, including inadequate support structures and the high costs of scientific research and development, highlight the need for cultural and incentive-based policy reforms. Such reforms should foster an environment conducive to innovation and entrepreneurship, integral to the E-Cap Framework. By aligning its strategies with the I-Cap and E-Cap Frameworks, Africa can effectively navigate the complexities of fostering a deeptech ecosystem through improved access to training, enhanced funding opportunities, collaboration among stakeholders, and the development of necessary infrastructure and demand. Investing in these interventions and the policy-foundations that support them will not only propel Africa technologically but also foster innovation, sustainable development, and the peace and stability that underpin inclusive growth. The ultimate goal is to create a Pan-African network of innovation ecosystems where resources and talent can flow freely, knowledge is shared easily, and ideas can cross-pollinate, driving innovation at the continental level. In this environment, a university research lab’s scientific output in Tunis could be accessible to an entrepreneur in Nairobi to tackle significant social issues, funded by VCs based in Cape Town, and sold to customers across the continent and beyond.
II. From SMEs to Innovation-Driven and Deeptech-Driven Enterprises
The development of innovation-driven ecosystems plays a pivotal role in fostering transformative advancements and addressing some of society’s most pressing challenges.
As African nations continue to invest in building and expanding their infrastructure to support traditional and small- and medium-sized enterprises (SMEs), it is essential to:
1) Distinguish them from innovationdriven enterprises (IDEs) and deeptech-driven enterprises (DDEs). 2) Ensure support infrastructure development for both to thrive. The distinctions between IDEs and DDEs encompass their approaches to research and development (R&D), capital requirements, risk appetite, and business objectives. IDEs engage in R&D efforts, often leveraging existing technologies, operating on shorter timelines, and requiring manageable levels of capital. IDEs primarily concentrate on incremental technological improvements in operations, products, or services, aiming to maintain a competitive edge. These ventures prioritize goals such as profitability, market share, and process improvement. Further along the scientific and technological spectrum, DDEs focus on innovations derived from foundational scientific discoveries and engineering breakthroughs, with the intent to disrupt and transform sectors like healthcare, energy, and agriculture (Budden, Murray, & Ukuku, 2021). In addition, DDEs demand substantial capital for intensive and prolonged R&D phases, operating in a high-risk, high-reward environment with groundbreaking innovations that entail considerable uncertainties. The nature of DDEs involves rigorous scientific research spanning multiple years, necessitating collaboration between experts from various disciplines and institutions. Challenges faced by DDEs include the need for substantial and long-term capital investments, scientific expertise, and navigating complex regulatory landscapes. The high-risk, high-reward environment of DDEs contrasts with the more agile and adaptable approach of IDEs, highlighting the diverse strategies and challenges within the spectrum of research and development initiatives (de Apodaca, Murray, & Frolund, 2022). 6
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For the growth and success of DDEs in Africa, building an effective and collaborative ecosystem is paramount. This ecosystem must encompass access to risk-tolerant and patient capital, research talent, universities with infrastructure for deep scientific and fabrication labs, and a supportive regulatory environment. A holistic approach is crucial for nurturing DDEs, driving further innovations, and addressing multifaceted challenges facing emerging and growth markets in Africa.
III. MIT Stakeholder Framework
Graph 2: MIT’s Five Stakeholders in an Innovation Ecosystem © Budden, P. & Murray, F. (2019)
The MIT Stakeholder Framework (Murray & Budden, 2019) identifies 5 key stakeholders that are critical for the development of an innovation-focused ecosystem in the pursuit of economic growth and prosperity. In essence, the framework centralizes the role of collaboration and integration among the multiple stakeholders – entrepreneurs, universities and centers of scientific research, government, corporations, and risk capital providers. One of the key characteristics of this model is its network of connected entities and the strength within and between them. The marked proliferation of networks of exchange and the consequent effects underpins the concept of ‘co-location’. Audrestch and Feldman (2004) observed an intriguing aspect of innovation ecosystems, and that is the high-concentrated and self-reinforcing nature of innovation-driven enterprises (IDEs) within these spaces. Once a region reaches a certain critical mass of stakeholders and successful IDEs, they tend to embark on a self-perpetuating cycle of growth, with significant implications for the region experiencing growth but also for those regions that have yet to reach the threshold for accelerated development. The continued cycle of progressive development in one region and progressive waning in another creates a gap in economic and technological progress. The MIT Stakeholder Framework, designed to optimize innovation-driven entrepreneurship and build an innovation ecosystem at the regional level, and augmented with a nuanced understanding of i-cap and e-cap, takes on a broader dimension within the Pan-African context. It provides a valuable blueprint to each stakeholder that allows them to: ● ● ● ● ● ● ● ●
Recognize and address barriers to collaboration. Align regulations to facilitate connections among entrepreneurs and stakeholders. Actively cultivate clusters of innovation ecosystems. Establish strong networks between stakeholders. Address barriers arising from differential access to resources and power dynamics. Amplify their impact and reach through aligned efforts with other stakeholders. Enhance effectiveness in addressing complex social and economic challenges. Include the essential role of SSOs within the ecosystem
Considering the continent’s geographic size and immense diversity in terms of demographics, languages, cultures, and resources, the framework becomes a vital and essential tool that can promote cooperation and a sense of shared purpose, provided there is strong connectedness between the ecosystems. 7
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Adapting the Frameworkfor Africa:
To apply the concept of ‘co-location’ to the Pan-African context requires a strategic and coordinated effort by involved stakeholders to identify key innovation ecosystems, perhaps grounded in traditional clusters, and then finding ways to establish innovation networks across the continent, in a way that maximizes collaboration and cooperation. Focusing on particular industries or technological domains such as healthcare, agri-tech, or renewable energy within an ecosystem can attract further innovators, research universities and institutions, in addition to risk capital players. Leveraging complementarities between stakeholders in and across regional ecosystems to drive innovative solutions will attract much needed financial and human resources, and result in more “made in Africa” solutions. The ultimate goal is to create a Pan-African network of innovation ecosystems where resources and talent can flow freely, knowledge be shared easily, and ideas can cross-pollinate and drive innovation at the continental level. In other words, a university research lab’s scientific output in Cairo would be accessible to an entrepreneur in Kenya to solve an important problem funded by VCs based in Cape Town and sold to customers across the continent and beyond.
IV. Stakeholder Analysis
Opportunities and Recommendations Africa is witnessing a new phase of entrepreneurial growth, with numerous opportunities emerging across sectors such as healthcare (health-tech and biotech), agri-tech, infrastructure, mobility, energy, and manufacturing. The recognition and pursuit of these opportunities are integral to advancing innovation and entrepreneurship across the continent. These sectors require not only digital technology but also deeptech, encompassing both hardware and software, as well as tangible solutions alongside applications.
notable examples include M-PESA, a pioneer of mobile banking in Africa, transforming how financial transactions are conducted; Andela, an innovative player in the tech education space, developing a new generation of software engineers; and mPharma, a key contributor in the healthcare sector, revolutionizing access to medicines and healthcare services. These companies represent the forefront of a technological wave that is altering traditional business models and consumer experiences across the continent.
This current wave of entrepreneurial activity builds upon a foundation laid over the past decade, where the African innovation landscape has witnessed intense growth in digital entrepreneurship. This was spurred by advancements in internet connectivity and the widespread adoption of smartphones. This digital revolution has reshaped critical sectors such as banking and finance, education, and healthcare; notable examples include M-PESA,
Following are key takeaways, insights, and recommendations synthesized from the roundtable discussions around three key themes: mapping the innovation landscape, fostering deeptech innovation, and building a pan-African innovation ecosystem.
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Entrepreneurs Trends & Opportunities:
An encouraging trend supporting the African innovation ecosystem is the rising participation of local investors, such as Seedstars Africa Ventures, Anava Seed Fund, Ajim Capital, Flat6Labs Africa seed fund, and Norrsken Africa Seed Fund, who are taking on a large share of the funding pie (Briter Bridges, 2023). These investors are crucial in providing financial support to innovation and deeptech start-ups in Africa. Additionally, the African context is marked by unique opportunities and relatively low competition in areas like cleantech, healthtech, and biotech. The ability to identify and capitalize on these opportunities offers innovative startups a distinct advantage that extends beyond financial investment to include mentorship, networking, and expertise.
Recommendation #1: Promoting Entrepreneurial Opportunities • • •
Actively encourage entrepreneurs to identify and leverage unique opportunities. Drive this through impactful awareness campaigns, dynamic networking events, and robust mentorship programs. Provide essential resources and guidance to navigate and capitalize on these opportunities, fostering innovation continent-wide.
Recommendation #2: Empowering Early-Stage Startups: • • •
Develop clear and actionable strategies for robust support of early-stage start-ups. Prioritize mentorship, training, and funding to propel them toward maturity. Consider the establishment of sector-specific incubators or accelerators to cater to the unique needs of start-ups.
Recommendation #3: Fostering Growth in Deeptech: • •
Address issues such as insufficient support systems and high research costs by creating specialized funds and accelerators. Forge partnerships with industry experts to provide essential mentorship and resources.
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Risk Capital Trends & Opportunities:
A defining characteristic of the African innovation ecosystem is the prevalence of early-stage startups, often operating from the pre-seed to Series A funding rounds. This prevalence underscores the vital need for continuous support and investment to nurture these startups and drive them towards maturity. Central to this effort is blended finance, which emphasizes the combination of diverse funding sources, including venture capital, international donors, and government support. This approach focuses on selecting the right partners and strategies to mitigate investment risks. Deeptech investment and milestones are particularly crucial, revolving around investments tied to specific criteria. Peer assessments and effective sales pitches play a significant role, as do the impact fund and partner collaboration components. These highlight the unique nature of impact funds and underscore the importance of thoroughly vetting potential venture capital partners. Recognizing the challenges in achieving a $100 million market size is crucial, especially for the need for Pan-African funds investing in Series C and above. Considerations of company structure, location, and intellectual property are vital, along with an understanding of the longer investment horizons typical of deeptech companies. The involvement of financial stakeholders is a consistent theme, highlighting their crucial role in supporting the entire innovation and investment process for deeptech startups and innovation initiatives across Africa
Recommendation #1: Optimizing Blended Finance Approaches: • • •
Develop clear guidelines and strategies for implementing blended finance, placing emphasis on partner selection and risk reduction. Create a robust framework for evaluating potential partners, ensuring alignment with the goals of the innovation ecosystem. Establish a robust framework to ensure investments in ventures that exhibit transparency and accountability through good governance practices, while also addressing the potential risks associated with cutting-edge technologies. A strategic approach involves well-thought-out exit strategies, considering optimal financing deployment windows based on current and forecasted market trends, and emphasizing thorough planning and network-building before securing funding.
Recommendation #2: Limited Partner Trainings: •
Develop and implement comprehensive training programs for LPs to enhance their understanding of the venture capital landscape. These programs could cover topics such as risk assessment, due diligence processes, industry trends, and best practices in venture capital investment.
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Recommendation #3: Platform to Identify Venture Deals: •
Establish a robust platform or network that facilitates the identification and evaluation of potential venture deals. This platform could utilize data analytics, machine learning, and other technologies to streamline the deal-sourcing process.
Recommendation #4: Corporate Collaborations: •
Foster collaboration between venture capital firms and corporate entities to facilitate successful exits and co-investment opportunities. This involves strategically aligning with corporates that may have synergies with portfolio companies, creating pathways for strategic partnerships, acquisitions, or initial public offerings (IPOs)..
Recommendation #5: University Collaborations: •
Collaborate with universities to establish a systematic approach for assessing and evaluating emerging technologies. This partnership can involve creating technology transfer offices, engaging in joint research projects, and establishing mentorship programs.
Recommendation #6: Investment Risk-Mitigation: •
Collaborate with government entities to implement measures that de-risk a portion of the investment in innovative ventures. This can include the introduction of financial instruments, grants, or guarantees that mitigate the potential downside for investors.
Government & SSOs Trends & Opportunities:
African governments are increasingly supporting deeptech growth through innovationfriendly policies, tax incentives, and direct funding, along with building essential infrastructure like high-tech parks and research labs to facilitate deeptech development. Sector Support Organizations (SSOs) are essential in fostering stakeholder collaboration within this ecosystem. Additionally, increasing regional collaboration among African countries is enhancing resource and knowledge sharing in the field of deeptech.
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Recommendation #1: Government Initiatives: • • • • • • • • • • • • •
Centralizing deeptech as a national priority and appropriating funds. Harmonize regulatory frameworks to nurture deeptech innovation. Streamline visa procedures and approval processes for talent mobility. Equip research centers in public universities to facilitate research and development activities, providing the necessary resources for innovation. Provide funding incentives for research and development in STEM fields. Support the development of strategic clusters to create specialized hubs for deeptech innovation. Organizing a task force to monitor the evolution and arising needs of the deeptech ecosystems allowing for an in-depth understanding leading to adapted legal frameworks. Establish regulatory and innovation sandboxes, particularly in key sectors like healthcare, energy, agriculture, and fintech, to encourage experimentation and development. Foster collaboration between large corporations and universities to establish innovation hubs within academic institutions. Match private sector investment with government funding to support the development of the deeptech ecosystem. Mutualize foreign donor organizations’ investments to maximize impact on innovation initiatives. Offer scholarships to talented individuals with the condition of working for the government, thereby attracting and retaining skilled professionals. Develop an intellectual property (IP) framework to expedite the spin-off of innovative ideas from universities.
Recommendation #2: Sector Support Organizations (SSOs): • • • • • •
Recognize the integral role of SSOs in creating a thriving innovation ecosystem. Build links and connections between various stakeholders to enhance collaboration. Prepare start-ups for commercial readiness and provide courses for upskilling start-ups. Facilitate open innovation between corporate entities and start-ups. Promote pan-African and international collaboration among innovation stakeholders. The formation of a coalition of SSOs to consolidate efforts and resources, aiming for a more significant and coordinated impact on the innovation landscape.
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Universities Trends & Opportunities:
Entrepreneurial education, paired with STEM proficiency, equips individuals with a mindset and a technical foundation to identify innovative opportunities, foster creativity and job creation. Universities, acting as collaborative centers, bring together students and industry leaders to facilitate joint research and transform academic projects into viable businesses. This synergy of education and practical application is vital for driving innovation and economic growth.
Recommendation #1:
Enhancing University-Corporate Collaboration: • •
Establish platforms facilitating collaboration, initiate joint research projects, and promote externship programs to create a seamless bridge between academia and industry. Implement project-based learning methods in collaboration with corporate research centers to encourage hands-on experience and innovative problem-solving skills.
Recommendation #2:
Enhancing University-Corporate Collaboration: • • •
Address challenges related to technology transfer and IP management through the development of streamlined initiatives. Establish standardized agreements, provide legal support, and institute technology transfer offices within universities to facilitate efficient processes. Develop curricula for commercialization to bring innovations and products to market successfully.
Corporations Trends & Opportunities:
Corporations play a vital role in the deeptech ecosystem by contributing to dedicated funds for product certification, and by launching acceleration and incubation programs. These initiatives, along with engagement with students, are crucial in inspiring innovative solutions to major challenges. Additionally, providing financial incentives for hiring researchers from academic institutions and supporting upskilling programs are key to enhancing expertise in the field. Lastly, essential to the realization of innovative ideas is the support for prototyping and research. This includes strategies that offer resources for prototyping, access to corporate infrastructure, and research resources, as well as supplying necessary hardware, components, and software for research and innovation efforts. 13
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Recommendation #1:
Collaborative Spaces and Innovation Funds: • • •
Create spaces for knowledge exchange and cooperation among stakeholders. Establish innovation funds to support university research and collaboration. Initiatives could include establishing innovation funds to support university research and collaboration on projects addressing country-specific challenges.
Recommendation #2:
Link the University Ecosystem to Corporations • • •
Create spaces for knowledge exchange and cooperation among stakeholders. Establish innovation funds to support university research and collaboration. Initiatives could include establishing innovation funds to support university research and collaboration on projects addressing country-specific challenges.
In advancing the discourse on Africa’s innovation landscape, the focus should also include an in-depth exploration of strategies aimed at promoting deeptech innovation across the continent. From fostering awareness to dismantling structural barriers and embracing decentralization, each facet plays a pivotal role in shaping a transformative narrative for deeptech innovation in Africa.
V. Promoting Deeptech Innovation Across Africa: Awareness, Structural Barriers, and Decentralization Deeptech Innovation Awareness:
The awareness and adoption of deeptech solutions emerge as pivotal drivers for Africa’s transformative development and prosperity. Looking beyond economic growth, the significance of deeptech extends to addressing pressing societal challenges such as health, climate change, food security, and energy sustainability. As African nations navigate the complexities of their diverse economic landscapes, the strategic embrace of deeptech not only fosters innovation but also propels the continent into a global hub of technological advancements. This necessitates a comprehensive effort to raise awareness at various levels and engaging stakeholders.
Overcoming Structural Barriers for Innovation:
In fostering deeptech innovation across Africa, overcoming structural barriers demands a strategic and collaborative approach from stakeholders across the continent. Drawing inspiration from the concept of ‘colocation’ and from MIT’s I-Cap and E-Cap Frameworks, the focus should be on establishing innovation networks and clusters that maximize collaboration and cooperation. This coordinated effort requires a multifaceted strategy targeting specific industries or technological domains, such as healthcare, agri-tech, or renewable energy. Strategic Development of Comparative Advantage: Identifying and concentrating on specific industries or technological domains is essential to attract innovators, research universities, institutions, and risk capital players to a particular area of comparative advantage. By strategically developing these clusters, stakeholders can create specialized hubs for deeptech innovation. These hubs will act as focal points, drawing together the necessary ingredients for innovation – knowledge, resources, and talent. 14
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A noteworthy example of strategic cluster development is Rwanda’s Kigali Innovation City. This city, dedicated to technology and innovation, strategically aligns various stakeholders, including the government, universities, and the private sector, with a specific emphasis on areas such as ICT and biotechnology. Knowledge Transfer and Collaboration: Facilitating knowledge transfer and creating collaboration platforms are vital components of overcoming structural barriers, directly aligning with the infrastructure dimension of MIT’s I-Cap and E-Cap Frameworks. Partnerships between research institutions, universities, and industry players should be actively promoted, while platforms that enable the sharing of research findings, best practices, and innovative solutions will contribute to a more connected and collaborative deeptech ecosystem. Initiatives like collaborative research projects and knowledge-sharing platforms, exemplified by the efforts South African Medical Research Council (SAMRC), are crucial in facilitating the transfer of expertise and fostering collaboration between researchers, healthcare institutions, and industry stakeholders to address health challenges. Talent Development and Collaboration: Addressing structural barriers has to involve a comprehensive approach to talent development, a key aspect of the Human Capital dimension in MIT’s I-Cap and E-Cap Frameworks. Encouraging collaboration between research universities and industry players, including VCs, is crucial. This can be achieved through initiatives like externship programs, where science talents gain expertise in a corporate environment and then return to contribute to the innovation ecosystem. Bridging the gap between academia, industry, and capital, will enhance the practical application of knowledge and innovation as well as include the deep expertise of scientists and researchers. The African Institute for Mathematical Sciences (AIMS) Industry Initiative serves as a dynamic platform fostering collaboration between scientific research universities and corporations in Africa.
With centers in South Africa, Senegal, Ghana, Cameroon, and Rwanda, this initiative aims to bridge the gap between academic expertise and practical applications in industries. Through strategic partnerships, AIMS facilitates externships, joint research projects, and internships that empower students, researchers, and faculty to work on real-world challenges posed by corporations. This integration of theoretical knowledge with industry needs not only enhances the skill set of participants but also contributes to the development of innovative solutions tailored to the African context. Financial Support and Risk Capital: Addressing the financial challenges in the African deeptech ecosystem is a critical aspect of the Funding dimension in the MIT I-Cap and E-Cap Frameworks. Establishing dedicated funds for deeptech innovation, especially with a focus on longer-term and highrisk projects, is essential. Encouraging risk capital players to invest in these ventures requires aligning their strategies with the unique demands of deeptech enterprises. Deeptech investing involves supporting technologies in early stages of scientific development, with a focus on future market potential and business plans. This includes recognizing the prolonged R&D phases and the considerable uncertainties associated with groundbreaking innovations. Increased investment and access to capital are fundamental in catalyzing innovation. Investors should be prepared for a multistage journey, recognizing increasing funding needs as technologies mature for market readiness while addressing scientific and technological risks (Bobier, Coulin, Morez, Emerson, Wagle, and Gourévitch, 2023). As Africa experiences economic growth and heightened foreign direct investment, a surge of resources can be made available for entrepreneurs and start-ups, provided the right policies are in place. This influx of capital serves as a catalyst for innovative projects and businesses. Impact investment and venture capital firms have begun to focus their attention on Africa, providing funding for innovative solutions that address local challenges. The Access Bank’s African Fintech Foundry in Nigeria is an example of a financial institution actively supporting innovation. It provides funding, mentorship, and resources to fintech start-ups. 15
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By offering risk capital and financial support, it enables these startups to navigate the challenges associated with developing and scaling innovative financial technologies. This investment surge plays a pivotal role in expediting the development and scaling of technologies and services that have a positive impact on African communities. Financial institutions play a pivotal role in fostering innovation and economic growth on the continent. Building upon existing models, banks should proactively create dedicated financial mechanisms to support innovative and deeptech ideas, research, and ventures. By offering robust financial support, these institutions can facilitate more accessible capital for innovation clusters seeking to scale their solutions. Coupled with forward-thinking, analytics and machine learningbased risk mitigation services, the financial landscape becomes more enticing for both investors and institutions to fund groundbreaking projects. To adapt to the evolving landscape, it is imperative for financial institutions to broaden their investment portfolios to explicitly include digital and deeptech innovations, within ventures, corporations, and university research centers. This strategic expansion within the context of the Funding dimension of the I-Cap and E-Cap frameworks positions financial institutions not only as traditional sector supporters but also as catalysts for transformative, cuttingedge projects. By doing so, financial institutions can effectively drive collaboration, grant wider market access, and facilitate the scalability of solutions, ultimately placing them at the forefront of catalyzing innovation and economic development across the African continent. Comprehensive Support Structures: In the deeptech landscape, there’s a crucial need for comprehensive support structures that align with the Infrastructure dimension of the MIT I-Cap and E-Cap Frameworks, arising from the recognition that the deeptech landscape demands a nuanced understanding and specialized skills.
As such, there is an urgent demand for increased training opportunities to equip investors with the knowledge necessary for navigating the complexities of emerging domains. Beyond training, access to talent emerges as a pivotal factor, emphasizing the necessity for establishing robust pipelines that seamlessly connect investors with skilled individuals capable of contributing to deeptech initiatives. Moreover, the acknowledgment of talent pipeline platforms underscores the need for structured mechanisms, affirming the commitment to a continuous flow of qualified professionals into the deeptech sector. Regulatory Environment: National Priority, Alignment, and De-Risking: The recognition of deeptech as a national priority by individual governments is pivotal and aligns closely with the Culture dimension of the MIT I-Cap and E-Cap Frameworks, which emphasizes the importance of creating a culture that supports innovation and risk-taking in developing a deeptech ecosystem. Governments can significantly reduce structural barriers around investing in deeptech research and innovative enterprises by strategically aligning investment strategies with the sector’s unique demands, so that countries can position themselves as leaders in the global deeptech landscape, with far-reaching implications for their socio-economic development. De-risking strategies and risk-mitigation tactics include the creation of targeted funds that are specifically designed to meet the unique demands of enterprises operating in the deeptech sector. The focus of such strategies is on supporting longer-term projects and high-risk initiatives. The collaborative ethos is reinforced through the endorsement of coinvestment, where pooling resources and expertise is seen as a strategy to mitigate risks and enhance the dynamism of the investment ecosystem. Lastly, harmonizing regulatory frameworks to support and nurture deeptech innovation is another critical aspect of this Culture dimension.
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This involves streamlining approval processes, providing incentives for research and development, and ensuring that regulations do not stifle the creativity and risk-taking inherent in the deeptech space. In Kenya, the regulatory environment for mobile money innovation has been pivotal. The success of mobile payment platforms like M-Pesa was partly due to regulatory support that allowed for experimentation and growth Pan-African Network of Innovation Ecosystems The overarching goal is to create a Pan-African network of innovation ecosystems where these key ingredients can flow freely across borders. By breaking down geographical barriers, stakeholders can facilitate the exchange of ideas and cross-pollination of innovation at the continental level. This network will serve as a collaborative platform for African countries to share expertise, resources, and best practices, creating a synergistic environment that propels deeptech innovation forward. The African Fintech Network, composed of fintech hubs, start-ups, and industry players from across Africa, serves as a model for a continental network. The network facilitates collaboration and knowledge exchange and provides a platform for African countries to share insights, pool resources, and collectively address challenges in the financial technology sector.
Decentralization as a Catalyst for Collaboration and Innovation:
Decentralized models, such as local entrepreneurship and community-led initiatives, empower communities to take ownership of their development and address their unique challenges, thus facilitating the innovation ecosystem at large. Empirical evidence suggests that promoting open trade can ignite innovation by intensifying competition, expediting the dissemination of novel ideas, and spreading the financial burden of innovation across a broader market (NBER, 2018).
An example of this can be seen with the African Continental Free Trade Area (AfCFTA), which has been instrumental in simplifying the movement of goods, services, and talent across the African continent. AfCFTA works to eliminate trade barriers and tariffs and reducing the complexity of cross-border trade. This simplification extends to customs procedures and documentation, making the movement of goods more efficient. Additionally, AfCFTA encourages the free movement of professionals and skilled workers, allowing innovation clusters to tap into a broader talent pool and attract skilled individuals from different African countries. The removal of trade barriers not only simplifies trade but also broadens market access, enabling innovation clusters to collaborate, share resources, and expand their operations more easily. Throughout the continent, innovation hubs, incubators, and co-working spaces are on the rise, providing a platform for collaboration and knowledge sharing among innovators across borders. These initiatives are enabling innovators to collaborate, co-create solutions, and build innovations with the potential to scale not only locally but also regionally. Impact Hub Accra, one of several large successful co-working spaces in Ghana, partnered with international organizations to create programs that connect local startups with mentors and investors from around the world; annual innovation summits like SA Innovation Summit and AfricaCom in Cape Town have become hubs for inventors, entrepreneurs, and investors from across Africa. Moreover, the adoption of blockchain technology and decentralized finance (DeFi) can democratize access to financial services, creating an equitable environment for entrepreneurs and individuals to participate in the global economy without reliance on traditional intermediaries. Decentralization stands as a cornerstone in empowering communities and facilitating innovation, unlocking Africa’s immense innovation potential.
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VI. Conclusion
MIT’s partnership with OST on the BRAIN initiative serves as a compelling example for crafting a Pan-African approach to bolster deeptech innovations. The MIT Framework, as outlined, emphasizes collaboration and integration among various stakeholders, including entrepreneurs, universities, government, corporations, and risk capital. This aligns seamlessly with the broader objective of reinforcing deeptech ecosystems across Africa. By adopting MIT’s strategic approach in the Pan-African context, there is an opportunity to create a united and collaborative community of entrepreneurs, universities, sector support organizations, governments, venture capitalists, and limited partners working together in a coordinated manner. The complementary strengths of stakeholders across different regions can be harnessed to drive innovative solutions, and the framework’s emphasis on attracting financial and human resources aligns with the need for a concerted effort to promote and grow deeptech innovations in Africa. The resulting outcome would be a dynamic environment where resources and talent can flow freely, knowledge is easily shared, and ideas cross-pollinate to drive innovation at the continental level. Strategic investment in AI technologies is key to transforming the productivity and GDP potential, not only of the global economy but also significantly within Africa’s evolving innovation landscape. With AI potentially contributing up to $15.7 trillion to the world economy by 2030 (PWC), its role as a cornerstone of deeptech innovation becomes increasingly vital for Africa. This transformative power of AI is underscored by the projection that around 40% of this economic growth will come from increased productivity and efficiency, while 60% will stem from market dynamics and consumption effects. Furthermore, the report underscores that 45% of total economic gains by 2030 are anticipated to stem from product enhancements driven by AI, reflecting its capacity to boost consumer demand with a more diverse, personalized, attractive, and affordable product range. This aspect of AI’s impact is particularly pertinent to Africa, where there is a growing demand for innovative solutions tailored to local needs and contexts. The unique challenges and opportunities in Africa’s innovation landscape are well-aligned with the global trajectory of AI’s economic impact. Therefore, the current period presents an opportune moment for a concerted effort to integrate and coordinate initiatives focused on strengthening deeptech ecosystems across Africa. The projected economic contributions of AI highlight its significance within the broader scope of deeptech and the potential for African nations to capitalize on this trend. By aligning with global advancements in AI within the deeptech sphere, Africa can accelerate its journey towards sustainable growth, enhanced innovation, and increased competitiveness on the world stage. While deeptech may currently be nascent in Africa, its strategic integration is not merely an investment in technological advancement; it represents a commitment to sustainable prosperity, wealth generation, and effective global competition. By cultivating a vibrant community of deeptech entrepreneurs, Africa can draw global investments, attract top talent, and inspire the next generation of innovators. The overarching vision is clear: to expedite Africa’s future prosperity by harnessing its abundant human capital and embracing deeptech as a driver for inclusive growth and sustainable development in the competitive landscape of global innovation.
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VII. Acknowledgment I would like to thank Dina Sherif, Executive Director of the Legatum Center for Development and Entrepreneurship, for her leadership and support throughout the entire process. Her guidance has been instrumental in shaping the direction of this work. I would also like to express my sincere appreciation to Professor Dame Fiona Murray, Associate Dean for Innovation at MIT Sloan School of Management, for generously sharing her expertise and insights. Her input grounded the paper and added depth to the content. Special thanks go to Khadija Ba, 22-23 Legatum Student Fellow for her editorial work and contributions to the overall quality of the paper. I would also like to thank Open Start Up Tunisia for organizing the roundtable that served as a catalyst for the ideas presented in this paper. The collaborative environment fostered by them enriched the perspectives shared. Last, but certainly not least, I would also like to thank all the panel and roundtable participants for enthusiastically sharing their ideas and experiences that greatly enriched this paper. Haitham Khoury, Ph.D., Director of Fellowships and Global Iniatives The Legatum Center for Development and Entrepreneurship at MIT
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Contributors: Abderahmen Chaoui Start up Advisor, Sendemo Abir Riahi Technoriat Ahmed Malek CEO, Tunisia Baits Aicha Mezghani Manager, Deloitte Alberto Garcia Picazo Head of Business Development, Hello Tomorrow Alex Ntale Managing Director, ICT Chamber Ali Mnif Cheif Investment Officer, Digital Africa Amel Jomâa Head of Programs, Connect-innov Amine Bousnina Innovation Manager, L’Oréal Anis Daoud CEO, Robovare Ari Jacobovits MIT Africa Director, MIT - Africa Aziza Inoubli, Research and Insights Lead, Briter Bridges Bienvenu Agbokponto Soglo Director, Government Affairs Africa, Intel Bilel Gassara CEO, Hyo Tec Bruno Martinaud, Entrepreneurship Academic Director, Ecole Polytechnique Carine Vavasseur, CEO, Ignite.E/Haske Dr. Charles Kimpolo, Director, Industry Initiative, AIMS Cherine Charfeddine, Head of Entrepreneurship Programs, Institut Pasteur Cheyenne V. Ellis, Senior Community Manager, Clinton Foundation Clapperton Chakanetsa Mavhunga, Professor Science, MIT Dali Lakhoua, Partner, AfricInvest Dennis Oaddo, Entrepreneur, Wala Digital Dina Sherif, Executive Director, Legatum Center at MIT Haitham Khoury, Director, Fellowships and Global Iniatives, Legatum Center at MIT Hamed Rabah, Partner, Silicon Badia Hannah Subayi, Program Manager, Launch Africa Iheb Triki, CEO, Kumulus Isadora Bigourdan, CEO, Consultant Janethkareen Kilonzo Kitsov, Co-Founder & CEO, PlateAI Jean-Michel Dalle, CEO, Agoranov Joris Cyizere, Acting Managing Director, C4IR Kais Zhioua, Director, Fertility Centers in Africa Kevin Odongo, Head of Technology, Founders Factory Africa Khaled Bej Jilani, Partner, AfricInvest Kisimbi Kyumwa Thomas, Senior Global Health Expert, EngenderHealth Leila Charfi, Ecosystem Expert Malek Lagha. Project Manager, Digital Africa Mamadou Diobet Diop, DeepTech Program Manager, DAUST Mehdi El Batti, Operations Officer, IFC Moataz Kotb, Managing Partner, Cultiv Ventures Mohamed Kharrat, CEO, Hayat Tech Mohamed ben mahmoud, Technoriat Natalie Pankova, Program Director, Pankova Natasha Franceschi, Chargé d’Affaires, US Embassy Noomane Fehri, Technoriat Noureddine Benothman, DP Dep, Actia Engineering Phil Budden, Senior Lecturer, MIT IDEA LAb Phil Rigeur, MIT EMBA, MIT Phumlani Nkontwana, Entrepreneurship & Research Center Director Stellenbosch University Rania Siam, Head of Biotech Dept., AUC Régis Tade, Technology Head, Sèmè City Richard Rabbat, AI & Product Expert, MIT/OST Rutvik DeepakPrincipal, GO Ventures
Salma Baghdadi, Innovation Lead, The Wave Global SIhem Bessalah, CEO, Caminova Tarek Chelaifa, Senior Manager, GSMA Travis Adkins, President and CEO, USADF Victor Otieno Agolla, County Chief Officer Digital Economy and Startups, Nairobi City County Government Vincent, Deeptech & Web 3 investor Wayne Stocks, Fund Manager of the University Technology Fund Wiatta Thomas, Fondatice et PDG, AquaFarms Africa Yassine Oussaifi, Partner, Ecosystem Expert Yomna Farouk, Head of Product Management, Shift EV Zeineb Fakhfak, Impact Partners Zineb Benhamou, Program Manager, 212Founders
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