With more than 1.2 billion people spread across 54 countries, speaking an estimated 1,500 to 2,000 different languages, Africa is a fascinating continent. Doing business there is perhaps an even grander adventure than wandering a Moroccan souq, scaling the peak of Mt. Kilimanjaro, swimming with great white sharks, or sleeping beside an active volcano.
It's a land of opportunity, and there's an active startup scene spread across several countries looking to take advantage of it.
It can be challenging to find accurate statistics on the nascent startup scene spreading across Africa. However, even if the numbers differ, the trend is similar. There's a wave of venture capital (VC) financing flowing into the entrepreneurs trying to solve some of the continent's biggest challenges.
According to Partech Ventures, VC funding in Africa has grown from $277 million in 2015 to $560 million in 2017. In contrast, Disrupt Africa puts the 2017 number at just $195 million but states this was a 51% increase over 2016 and the most successful year for tech startups in Africa. The 2017 stats represented 128 rounds of funding. Most investments came from the US or Europe, but local venture funds have been emerging as well. TechCrunch estimates that 43% of the funds investing in Africa were headquartered in the continent and managed locally. Of these locally-based and run funds, 41% had its Headquarters in Nigeria.
Most Active VC Funds
The most active VC funds fueling the African startup tech boom include:
- Singularity Investments (Nigeria)
- Golden Palm Investments (Ghana)
- Musha Ventures (US-based, founded by Kenyan-born Aadil Mamujee)
Largest Financing Rounds
The largest rounds of funding so far in 2018 have been:
- $52 million to Jumo (South Africa)
- $47.5 million to Cellulant (Kenya)
Startup Competitions and Incubators
There's an ever-growing list of startup competitions, challenges, and incubators to help these companies raise awareness and, hopefully, investment capital. Some widely recognized programs include TechCrunch's Startup Battlefield, Johnson & Johnson's Africa Innovation Challenge, World Health Organization's Africa Innovation Challenge, USAID's Development Innovation Ventures, and Startupbootcamp AfriTech.
Startups Evolving Beyond Fintech
One of the first startup trends that emerged in many countries in Africa was fintech, as entrepreneurs sought to leverage mobile phones' power to allow a previously unbanked population to have access to money. Mobile money has been helping to improve financial inclusion.
For example, 20%+ of adults in Burkina Faso, Côte d'Ivoire, Gabon, Kenya, Senegal, Tanzania, Uganda, and Zimbabwe use only a mobile money account. There is a tremendous opportunity to tap the large
percentage of the population in the agricultural sector who still are largely excluded from the credit and mobile-based financial sector.
In addition to finance-focused solutions, other emerging sectors include:
- Off-grid tech
- Electronic and mobile commerce
- Personal services
- Health care
- Transportation and logistics
- Water, sanitation, and hygiene
- Leisure and travel
- Creative, media and entertainment
Startup Scene Dominated by Three Countries
The top countries for startup funding continue to be led by South Africa, Kenya, and Nigeria. These three countries have received 30%, 26% and 20%, respectively, of the continent's startup funds. Egypt, Rwanda, Ghana, Uganda, Senegal, Morocco and Cameroon round out the top ten. South Africa's Strong Infrastructure South Africa's startup development has been supported by robust infrastructure and connectivity. High-quality secondary and tertiary education supplies a deep well of talent, and tech hubs and incubators have been around for a decade or more to help startups grow. Most companies are clustered in the greater Cape Town and Johannesburg areas. Recently, Naspers, a South Africa media and investment company announced a $300 million commitment to support the country's tech sector. Kenya's Money Solutions
Kenya's development as a startup hub began by trying to solve two main challenges: access to money and emergency notifications. Startups in Kenya benefit from mobile phone connectivity, which is being leveraged to solve problems from payments to service delivery, and more. A large private sector, diversified economy, and an economically-empowered and entrepreneurial-minded consumer base make Kenya a fertile territory for new companies and ideas.
Nigeria Entrepreneurial Spirit
Nigeria has enormous market potential with approximately 184 million residents and a large but oil-focused economy. Startup founder Onyeka Akumah of Farmcrowdy put it best, "The Nigerian startup ecosystem is an unconventional blend of raw talent, budding infrastructure and organized chaos." Combine this talent with a young, growing population and the support of tech incubators, and it's easy to see why Nigeria is a leader in the startup revolution in Africa.
Key African Startups
The list of African startups is ever-growing, but here are some of the most exciting companies by country.
- LifeQ – Digital health startup using science-driven technology and analytics to understand better how humans work. Last seed round $3.9 million.
- Jumo – Mobile lender providing access to working capital for small and medium enterprises. Last funding round $52 million.
- Yoco – Mobile Point-of-Sale application enabling business merchants and entrepreneurs to accept card payments. Series B funding $16 million.
- Giraffe – Recruiting application. Last seed round $200,000.
- Twiga Foods – Mobile food-supply platform linking farmers and vendors in urban areas. Latest funding round $9.75 million.
- Cellulant – One-stop payment platform. Latest PE growth funding $47.5 million.
- Sendy – Door-to-door delivery platform. Series B expected to close by end of 2018.
- Mawingu – Internet network provider in rural areas. Latest funding round $4.1 million.
- Sokowatch – On-demand inventory service improving order and delivery for small businesses. Last funding round was $100,000.
- Lori Systems – Online logistics coordination platform. Latest VC funding was $6.17 million.
- Paga – Mobile payments company. Series B funding $10 million.
- Paystack – Mobile payments company and first Nigeria startup to enter Y Combinator. Series A funding $10.2 million.
- VConnect – Platform to hire local service professionals.
- Sliide Airtime – News and entertainment app that allows users to collect free airtime.
- Printivo – Efficient and high-quality printing expertise. Undisclosed amount raised in 2017.
- DIYLaw – Technology platform for legal services.
- Nerveflo – Independent digital content provider.
- RecycloBekia (Egypt) – Electronics recycling. Raised an undisclosed amount in 2012.
- Safari Yetu (Tanzania) – Bus reservation and ticketing system.
- MeQasa (Ghana) – Online real estate platform for Ghana. Latest funding round $500,000.
- SafeMotos (Rwanda) – Uber for motorcycle taxis. Latest funding round $131,000.
- DabaDoc (Morocco) – Healthcare technology connecting patients to doctors. Raised an undisclosed amount in 2018.
- Funding data from PitchBook, Crunchbase or company resources