Daikin looks for startup African partners to drive appliance sales

07, Nov. 2019

By Atul Ranjan

NEW DELHI, NNA – Japan’s Daikin Industries Ltd., the world’s largest maker of air conditioners, is seeking to fund African startup companies as a way of gaining traction in their markets.

The Osaka-based appliance maker is working with Africa-focused Japanese venture capital firm Samurai Incubate Africa Inc. to organize their first-ever startup event on the continent, the two parties announced online.

“We expect to find some excellent startup companies with the cooperation of Samurai Incubate,” Daisuke Kakinaga, a Daikin spokesman in Tokyo, told NNA via email on Oct. 5.

Daikin is trying to sell appliances in an “innovative way which they haven't tried anywhere in other parts of the world”, Samurai Incubate Africa Inc. managing partner Rena Yoneyama said in an Oct. 4 e-mail.

“In order to go into the African market, they would need great local partners and a different marketing strategy,” she said. “To do so, partnering with African startups would be one of the best scenarios.”

Africa is a newer market for Daikin, with many African countries still untapped, Kakinaga said. The Japanese firm needs the expertise of local players to gain market access, he said.

He said that Daikin is particularly keen on tying up with startups in fintech category offering solutions such as mobile payments and e-commerce and push sales.

“Some of the unique challenges include finding solutions to boost our sales in the low-income countries and finding skilled manpower to install our ACs and provide maintenance services in the region,” Kakinaga said.

“We hope local startups would be able to offer innovative business models around which we can work to tackle some of these problems,” he added.

The startup event titled “Daikin-Samurai Incubate Africa Ideathon” is taking applications from startups in fintech and e-commerce. Ten finalists will be shortlisted to participate in a final pitching event on Dec. 11 in the Kenyan capital Nairobi.

The pitch event winner is expected to receive an investment of $100,000 to $150,000 from Samurai Incubate and others picked by Daikin will receive full funding to develop their businesses.

Samurai Incubate Africa Inc., a subsidiary of Japanese VC firm Samurai Incubate Inc., entered Africa last year. It has invested in 16 African startups till date in countries such as South Africa, Kenya, Uganda, Rwanda and Nigeria. Total investments come to $2.5 million, Yoneyama said.

Daikin’s separate fund for global startups globally will also be used in Africa, Kakinaga said. The company announced last week it had set aside $100 million to fund startups worldwide through 2024.

NNA reported in April this year that Daikin was setting up a regional office in Nairobi, as part of its plan to push sales in Africa market.

According to the latest data from the Japan Refrigeration and Air-conditioning Industry Association, the overall AC demand in Africa was estimated to be around 3 million units in 2018.

A report issued last year by ResearchAndMarkets.com said that the Africa air conditioners market is projected to grow at a compounded annual growth rate of over 8 percent between 2018 and 2023 to reach around $3.35 billion on the back of rising per capita income, increasing urbanization coupled with hot and humid weather across the region.