Africa's Startup Boom

The total amount of startup funding in Africa rose nearly 400 per cent in 2018, says the latest venture investment report of WeeTracker. The actual number of deals doubled but funding rounds are increasingly over $ 5 million each. In total, African startups raised a record $725.6 million across 458 deals. 

Increased investor confidence in startups, especially Nigeria, South Africa and Kenya – the three largest hubs, has meant big ticket deals are increasingly common. The top 10 deals of last year together amounted to $ 457 million in funding and represented 61 per cent of the year’s total. Unlike in the past, such funding now increasingly covers both early stage and Series A growth. Thirty startups raised individual rounds higher than $ 5 million in 32 deals – amounting ot $ 626.9 million in capital. 

African fintech startups received the most, accounting for 40 per cent of total funding raised. Five of the top 10 biggest deals were also in the same sector. 

In Nigeria, the continent’s most valuable startup ecosystem, talking up tech has become part of the country’s election campaign. Elections are scheduled in February, but with over half of voters in the 18 to 35 years bracket, candidates are trying to show themselves to be startup-supportive and tech savvy. 

In a recent gubernatorial debate, Jide Sanwo-Olu of the All Progressive Congress claimed to have visited all the technology companies in the state and promised to set up a tech hub in all the local government wards of Lagos. 

 “I think the politicians are just paying lip service,” said Iyin Aboyeji, co-founder of Andela and Flutterwave, two of Nigeria’s most prominent tech startups, speaking to “Tech votes are influential because they have the ability to reach large audiences of young people which are the largest voting blocs.” 

One tech sector that hasn’t fared so well in Nigeria has been e-commerce. Struggling in an environment where buyers prefer cash, Amazon and Alibaba provide stiff competition, a number of local e-commerce ventures have closed shop. An early venture in e-commerce, Konga,shut down after seven years and despite $ 70 million in investment. OLX, Efritin, DealDay and Careers24 are other online commercial platforms that have closed down or cut back operations. Online supermarket announced it was moving away from e-commerce. 

Some platforms, like the Jumia brand that provides online classifieds, real estats, job listings, payments and so on, continues to shoulder on. Unlike other brands it provides services across the continent. It has attracted $ 700 million in investments but still lost $ 140 million in 2017.


January 29, 2019

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About the Author

Pramit Pal Chaudhury

Pramit Pal Chaudhuri, Foreign Editor, Hindustan Times, and Distinguished Fellow & Head, Strategic Affairs, Ananta Aspen Centre

Pramit Pal Chaudhuri writes on political, security, and economic issues. He previously wrote for the Statesman and the Telegraph in Calcutta. He served on the National Security Advisory Board of the Indian government from 2011-2015. Among other affiliations, he is a member of the Asia Society Global Council, the Aspen Institute Italia, the International Institute of Strategic Studies, and the Mont Pelerin Society. Pramit is also a senior associate of Rhodium Group, New York City, advisor to the Bower Group Asia in India, a member of the Council on Emerging Markets, Washington, DC, and a delegate for the Confederation of Indian Industry-Aspen Strategy Group Indo-U.S. Strategic Dialogue and the Ananta Aspen Strategic Dialogues with Japan, China and Israel. Born in 1964, he has visited over fifty countries on five continents. Mr. Pal Chaudhuri is a history graduate from Cornell University.