Sony Ventures Announces a $10M Fund for African Entertainment Startups

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 support technology enterprises across markets and stages. SVC completed the $215 million initial financing of Sony Innovation Fund 3 last year to support emerging technology companies 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 a range of industries including entertainment, robotics, AI, mobility, fintech, healthcare, logistics, and SaaS.

With over half of the venture capital invested in the continent last year, fintech is still the industry in Africa that receives the most funding. Sony Ventures is chosen to start with entertainment for its first entry into Africa, despite the fact that other industries like logistics, healthcare, and mobility are on the minds of local and international investors interested in African tech. 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 the use of creativity and technology, despite the fact that the Japanese behemoth launched the Sony Innovation Fund in 2016 to invest in projects in a variety of 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 creators and businesses searching for novel ways to improve entertainment experiences for audiences.

Sony’s Africa-focused fund will give the region’s entertainment tech firms a much-needed boost since they have long struggled to find 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 market 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 would 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 the production of film content in Africa since 2016. The music business, on the other hand, is supported by the extensive streaming of local genres like Afrobeats and has developed to the point where it is luring international record labels to sign its local performers.

We are looking into making investments 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 entertainment industry in Africa in a variety of ways, including by providing technologies, working with creators, collaborating on intellectual property and contents, providing marketing support, and other ways that Sony can contribute.

Tsuchikawa said the fund would give follow-on investments to its portfolio firms in addition to its seed and early-stage investing strategies. Although Sony Innovation Fund: Africa anticipates its ticket sizes to vary from $250,000 to $1 million, there is no specific time schedule for the deployment of the $10 million or a set number of firms the fund aims to invest in. “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.”

Every market Sony Ventures has invested in with its funds, including Japan, India, Israel, Europe, and the U.S., 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 support the fund, according to Tsuchikawa, but the business is currently looking to hire a full-time employee on the continent who can handle the venture capital sourcing role.

The Sony Innovation Fund has supported the expansion of its portfolio firms throughout the years by offering options for collaboration, ranging from the provision of Sony-owned technologies to joint development and business alliances. This is typical of corporate venture capital structures. A little over 40% of the businesses in the portfolio of the Sony Innovation Funds have strategically collaborated with Sony.

According to Tsuchikawa, the fund will also encourage potential partnerships between its African portfolio companies and the Sony Group’s entertainment business unit, depending on the stage and timing of the business. It will do this by introducing them to its vast network of resources, technical know-how, and market insights.

In the meantime, Sony and the International Finance Corporation (IFC), the largest organization dedicated to private sector investment in emerging economies, particularly Africa, have reached a cooperative agreement. According to Toshimoto Mitomo, executive vice president of Sony Group Corporation, this partnership will leverage both sides’ strengths in addition to financial commitment to help the expansion of the African entertainment industry.

Through its corporate venture capital initiatives, the Sony Group has been supporting entrepreneurs and next-generation technologies while also encouraging open innovation. By offering chances for collaboration with the entertainment businesses within the Group, the Sony Innovation Fund: Africa’s operations aim to foster the expansion of the African entertainment sector and advance the progress and development of the continent, Mitomo continued.