Sony Group has unveiled the creation of the Sony Innovation Fund: Africa (SIF: AF), a program designed to bolster the growth of entertainment ventures in Africa. The Tokyo-based multinational conglomerate, through its subsidiary Sony Ventures Corporation (SVC), has allocated $10 million for early-stage startups in the gaming, music, film, and content distribution sectors.
This marks Sony Ventures’ latest effort to support technology businesses across diverse markets and stages, with a specific focus on African entertainment startups. In the preceding year, SVC successfully concluded the initial closing of the Sony Innovation Fund 3, amassing $215 million to back emerging technology companies across all development stages. The subsidiary oversees Sony’s venture investment initiatives through various channels, including SIF3, Sony Innovation Fund (SIF), Sony Innovation Growth Fund by IGV in partnership with Daiwa Capital Holdings, and Sony Innovation Fund: Environment.
Sony’s venture arm has made over 100 investments in consumer and enterprise-facing businesses spanning various sectors, such as entertainment, robotics, AI, mobility, fintech, healthcare, logistics, and SaaS, using these funds.
In Africa, fintech has been the most heavily funded sector, attracting nearly half of the continent’s venture capital investments in the previous year. Although sectors like logistics, healthcare, and mobility garner significant attention from local and global investors interested in African tech, Sony Ventures has chosen to initiate its African venture with entertainment, a segment that often goes overlooked.
Gen Tsuchikawa, CEO of Sony Ventures, emphasized that despite Sony’s establishment of the Sony Innovation Fund in 2016 for investments in various business domains, the company remains committed to being a creative entertainment and technology enterprise with a mission to infuse the world with emotion through creativity and technology. He added, “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.”
Sony’s Africa-focused fund is poised to provide crucial support to entertainment tech startups on the continent, which have faced challenges in securing consistent venture capital over the years. In 2022, these startups secured $42 million, representing just 0.9% of Africa’s total venture capital investments, despite the substantial potential in gaming, music, movies, and content distribution – areas that Sony is particularly interested in.
For example, the gaming market in Sub-Saharan Africa is projected to exceed $1 billion by 2024, and video-on-demand subscriptions are set to rise to 13.7 million in 2027. The music industry is also thriving, with global record labels signing local artists and the streaming of indigenous genres like Afrobeats.
Tsuchikawa stated that the fund will not only engage in seed and early-stage investments but also provide follow-on investments to its portfolio companies. While there’s no fixed timeline for deploying the $10 million or a predetermined number of startups to invest in, Sony Innovation Fund: Africa anticipates ticket sizes ranging from $250,000 to $1 million. Tsuchikawa mentioned plans to commence work in South Africa, Kenya, Nigeria, and Ghana, with potential expansion in the future.
Sony Ventures has established offices in markets where it has invested through its funds, including Japan, India, Israel, Europe, and the U.S. However, in Africa’s case, it will initially receive support from the Sony Ventures team in Europe while also working on hiring a full-time member on the continent for venture capital sourcing.
Similar to many corporate venture capital structures, Sony Innovation Fund has supported its portfolio companies’ growth through collaboration opportunities, including the provision of Sony-owned technologies and joint development ventures. Approximately 40% of Sony Innovation Fund’s portfolio companies have strategically partnered with Sony. The fund also aims to facilitate collaborations between its African portfolio companies and Sony Group’s entertainment business division, leveraging its extensive network of resources, technical expertise, and industry insights.
Moreover, Sony has established a collaboration agreement with the International Finance Corporation (IFC), a prominent global development institution with a focus on the private sector, actively investing in emerging markets, including Africa. This collaboration, in addition to financial investment, is set to foster the growth of the African entertainment industry through the utilization of both parties’ strengths, as stated by Toshimoto Mitomo, the executive vice president of Sony Group Corporation. Sony Group aims to advance the African entertainment industry and promote regional development through the activities of the Sony Innovation Fund: Africa.