The year 2018 is turning out to be a great one for startups in Africa. It has only been seven months and startup funding in the continent has reached 168.6 million dollars. This has completely surpassed last years total funding which was 167.7 million dollars. It is quite fascinating that half the year’s funding has increased by $47.7 million which is four times fold than in 2017. The development comes at a time when most African economies have been booming. For instance, the legalization of sports betting in countries like Nigeria and Kenya have ensured that many top players like Betway are entering African economies, with positive results.
How Are Startups Making a Difference?
Most investors have been fascinated by the Fintech sector. Africa has long been considered the global leader in Fintech adoption. The continent has low traditional banking rates and the infiltration of mobile phones is what has aided Financial technology to grow. African Fintech is set to grow from $200 million daily in 2018 to $30 billion in 2020.
This year alone Fintech has raised $95 million with half of the amount being raised in the continent. Moreover, the sector has completed four of the ten most important deals of the year. Cellulant has been the biggest beneficiary raising $47.5 million in its Series C round. The success of mobile money transaction like Mpesa in Kenya and East Africa is likely behind the success of mobile money in Africa.
The Top African Economies Today with the most Number of Startups
Nigeria has had the highest number of startups securing 29 deals, Kenya (23), Egypt (21) and South Africa(19). Nigerian deals managed to get a total gross of $29.4 million. Kenya follows suit with lesser startups than Nigeria. However, the country has amassed $89.2 million which is thrice the total number of funding received in Nigeria.
The year has also seen the establishment of funds such as Africa Guarantee Fund, Goodwell Investments and AFDB fund. They have already inspired the development of startups.
However, it is crucial to note that different companies report different annual totals, primarily because they each use a different methodology. For instance, Partech Ventures annual venture report shows that funding in 2018 reached $560 million, which is a good 53% year on year growth. The report included startups that are headquartered in Africa and those outside the continent. On the other hand, Disrupt Africa report shows that Africa tech startups raised a funding of $195 million in 2017. This was up 51% in 2016.
Startups are bound to benefit if investors pull all resources from all over the continent. Forums like the Africa Summit can foster innovations that will see startups in a unique position to answer the continent’s challenges. All they need is an enabling environment that will benefit the startup communities.
With African countries opening up their doors and focusing on digital skills and growth, the future does look bright.