Despite the relatively nascent stage of start-up ecosystems across Africa, more than $2bn has been raised over the past two years. While the burgeoning capital availability across Africa is positive news, funding remains heavily skewed towards just four countries: Nigeria, Egypt, Kenya and South Africa. This clustering has shown a propensity to channel attention away from the rest of the continent; despite this, several notable developments have been happening in other African countries.
Second-tier ecosystems on a steady rise
A new tier of less well funded tech ecosystems is now experiencing an increase in funding facilities and interest — especially in Morocco, Senegal, Ghana, Ethiopia and Uganda, with companies such as Mubawab, Paps, Redbird Health, mPharma, ArifPay and Kasha making strides in their respective verticals. From a regulatory perspective, countries in north Africa are gearing up to become ICT hubs as Gulf-based investors begin broadening their interest in the continent.
Capturing francophone Africa’s potential
Despite only capturing a fraction of the total funding, and presenting more contained technology scenes than other regions, francophone west Africa is quickly taking centre stage, with the arrival of global players such as Glovo, Heetch and Uber. From Partech Partners to Orange Ventures, funding facilities with a focus on the region are ramping up their portfolios.
Money is being made available for decentralised energy — with companies such as SolarX, Oolu, Baobab+ and Daystar Power raising multi-million dollar rounds — and the rapidly growing transport and logistics space, from Mali’s Teliman to Ivorian MojaRide. Most recently, Côte d’Ivoire’s fintech Djamo was the first company in the region to make it into global accelerator Y Combinator in several years.
Growth-stage funding’s positive knock-on effect
Companies headquartered in Africa are starting to build for a more global audience, targeting both emerging and mature markets for expansion, including names such as Migo, Aella, SWVL, Skynamo and Aerobotics. Growth-stage funding rounds into companies based in Nigeria, Egypt, Kenya and South Africa are also indirectly boosting adjacent ecosystems, as companies such as Sendy, Sokowatch and Twiga Foods expand to their neighbouring countries.
Growth and diversification of Africa’s start-up support landscape
Several support organisations and a new generation of investors joining the race are facilitating the advancements of the continent’s comparably under-explored ecosystems.
Following the global corporate innovation wave, large brands are setting up venture capital funds or innovation arms to support, set up, partner with or acquire start-ups. In the payment space, giants such as Visa, Mastercard and Stripe have been establishing partnerships with fintechs and e-commerce platforms in order to accelerate the continent’s financial integration in the global market.
Female founder-focused funds and facilities, such as Enygma Ventures and Alitheia Capital IDF, are enabling more targeted and active participation of women in the tech ecosystem, and a growing number of impact funds are investing in innovation to drive the sustainable development goals forward. There has also been major growth in early-stage supporters providing different investment vehicles, from international start-up support veterans, such as Founders Factory, Startup Bootcamp and Y Combinator, all the way to foundations and development-focused programmes, including Mastercard Foundation and GSMA.
Looking to the future
Start-up ecosystems across Africa are beginning to play a vital role in determining the attractiveness of the continent by attracting global brands, talent and a diverse pool of investors. Although several challenges remain, especially those caused by infrastructural inadequacy and premature markets, a growing number of success stories involving digital and impact-focused businesses are driving investor engagement and start-up support.
Dario Giuliani is founder and director of research company Briter Bridges.
Lisa With is head of research and operations at Briter Bridges.
This article first appeared in the April/May print edition of fDi Intelligence. View a digital edition of the magazine here.