Cloud dependence poses risks to African AI startups

African AI startups face potential financial and operational risks due to their heavy reliance on cloud computing providers. According to Oluwaseyi Ayodeji, founder of Regal Stack, the primary concern is not the act of renting computing capacity, but rather the exposure of a startup’s growth and profit margins to the specific terms set by these providers.

While renting capacity allows founders to preserve cash and provision resources quickly, owning physical infrastructure—including data centers, servers, and cooling systems—remains prohibitively expensive. Ayodeji noted that building a single megawatt of AI-ready capacity in Africa can cost between $600,000 and over $10 million, driven largely by the need for backup power and currency risks related to importing equipment.