The Sony Group today declared the launch of Sony Innovation Fund: Africa (SIF: AF), a program that will aid the expansion of entertainment companies in Africa. The Tokyo multinational company has appropriated $10 million for early-stage businesses in gaming, music, cinema, and content distribution through Sony Ventures Corporation (SVC).
This fund targeted at African entertainment entrepreneurs is Sony Ventures’ most recent effort to help technology enterprises across markets and stages. SVC completed the $215 million initial financing of Sony Innovation Fund 3 last year to support emerging technology firms at all phases of development. Through SIF3, Sony Innovation Fund (SIF), Sony Innovation Growth Fund by IGV, a partnership with Daiwa Capital Holdings, and Sony Innovation Fund: Environment, the subsidiary oversees all of Sony’s venture investing efforts.
From all these funds, the venture arm of the Japanese IT giant has invested in more than 100 consumer and enterprise-facing companies across various industries, including entertainment, robotics, AI, mobility, finance, healthcare, logistics, and SaaS.
With over half of the venture capital invested on the continent last year, fintech is still the industry in Africa that receives the most funding. Sony Ventures has chosen to start with entertainment for its first entry into Africa, even though other industries like logistics, healthcare, and mobility are on the minds of local and international investors interested in African innovation. Entertainment is a sector that is frequently disregarded.
According to Gen Tsuchikawa, CEO of Sony Ventures, the company’s mission is to spread sentiment through creativity and technology, even though the Japanese behemoth launched the Sony Innovation Fund in 2016 to invest in projects in various industries.
The entertainment industry has been and will continue to be a major area of concentration for Sony Innovation Fund. That motivated Sony to launch SIF: AF, he continued. “Africa, in particular, has a thriving ecosystem of artists and businesses searching for novel ways to improve entertainment experiences for viewers.
Sony’s Africa-focused fund will provide the region’s entertainment tech firms a much-needed boost since they have long struggled to get reliable venture capital funding. Despite the enormous potential to be unlocked in gaming, music, movie, and content distributions—critical areas within the industry that Sony is particular about—these startups only received $42 million in 2022, or 0.9% of all venture capital investments in Africa, according to Partech Africa.
Consider gaming as an example. The gaming industry in Sub-Saharan Africa is predicted to top $1 billion by 2024, according to estimates from games market data providers Newzoo and Carry1st, a South African producer of games and digital content.
Similar to this, it is anticipated that there will be 13.7 million video-on-demand subscribers in Africa by 2027, up from 4.89 million at the end of 2021, with revenues doubling from $623 million to $2 billion. Amazon Prime and other streaming services tailored for African audiences, such as Showmax, Canal+, Disney+, and ROK, are vying for market share in the video streaming industry. In April, Netflix announced that it had invested €160 million in producing film content in Africa since 2016. On the other hand, the music business is supported by the extensive streaming of local genres like Afrobeats. It has developed to the point of luring international record labels to sign its local performers.
We are looking at investing in these sectors because we want to encourage Africa’s artists, entrepreneurs, and teams since we see tremendous potential and inspiring creativity there. We are encouraged by the fact that technology is being adopted more widely in these sectors, said Tsuchikawa.
The fund will attempt to support those creators and the expansion of the African entertainment industry in various ways, including by providing technologies, working with creators, collaborating on intellectual property and content, providing marketing support, and other ways that Sony can contribute.
Tsuchikawa said the fund will give follow-on investments to its portfolio firms and its seed and early-stage investing strategies. However, SIF: AF anticipates its ticket sizes to vary from $250,000 to $1 million. There is no specific schedule for deploying the $10 million or a set number of businesses the fund aims to participate in. Tsuchikawa responded to questions about whether Sony Innovation Fund: Africa had made any investments yet and whether companies like a16z-backed Carry1st and Tencent-backed Kukua are on its radar by saying, “We have initiated due diligence on a few startups, but I can’t share any details at this time.” “We intend to begin working with South Africa, Kenya, Nigeria, and Ghana, but there is a chance that the project’s scope may expand in the future.”
Sony Ventures has invested in every market with its funds, including Japan, India, Israel, Europe, and the U.S., and has a Sony Ventures office. It will use a less direct strategy in the case of Africa. The Sony Ventures team in Europe will initially assist the fund, according to Tsuchikawa. Still, the business is presently looking to hire a full-time employee on the continent who can handle the venture capital sourcing role.
