Investment in African tech start-ups in 2021 was unprecedented, at $1.6 billion (R25.5 billion) in total – a 113% increase from 2020.
This is according to policy advisory Start-up Genome’s Global Start-up Ecosystem Report (GSER) 2022, which notes that for Africa, it’s looking like 2022 will be an even bigger record-breaker, with total venture capital investment in Q1 at $1.1 billion (R17.5 billion).
In its 10th year, the GSER is data-driven research on start-ups with over 280 entrepreneurial innovation ecosystems, rankings of the leading 140 ecosystems, and three million start-ups analysed.
“This 10th anniversary edition of the Global Start-up Ecosystem Report reflects on how ecosystems have evolved since 2012,” says JF Gauthier, founder and CEO of Start-up Genome.
Start-up Genome says fintech is the continent’s most successful sub-sector, accounting for $571 million in funding and producing all three of the region’s unicorns.
It says in March 2021, Lagos-based fintech firm Flutterwave raised $170 million in a Series C round at a valuation of $1 billion. In spring 2022, it became the highest valued African start-up to date at $3 billion.
Lagos mobile payment platform OPay secured a $400 million Series C round in August 2021, taking its valuation to $2 billion, the advisory firm adds.
It points out that Dakar-based Wave Mobile Money is the region’s third unicorn, while Nairobi online processing company DPO Group also made headlines when it exited at $288 million in July 2020.
According to the report, Lagos is the region’s leading ecosystem and has a strong fintech industry, but mobile payment usage is high across much of Africa.
Lagos is followed by Nairobi, Cape Town, Johannesburg and Accra, respectively, says the report.
It notes Kenyans have made mobile wallet and phone payments a critical part of their everyday lives, to the degree that transactions account for 87% of the nation’s GDP.
In Ghana, it adds, such transactions make up 82% of GDP. “Kenya is easily the larger market, but Ghana has become the fastest-growing mobile money market on the continent in recent years,” it says.
“Successful local founders – including Olugbenga Agboola (Flutterwave), Gregory Rockson (mPharma) and Shola Akinlade (Paystack) – are putting their support behind start-ups, further accelerating the rapidly-growing African start-up ecosystem,” says Start-up Genome.
“Governments throughout Africa are also recognising the potential for the tech industry and have begun taking concrete steps to show support. The Nigeria Start-up Bill aims to create clear and thoughtful regulations that will help boost the tech ecosystem and solidify the potential of the digital economy.”
Globally, the report says since 2012, average Series A rounds have tripled to more than $18 million. Since the pandemic, it notes that tech companies grew 2.3 times more than their non-tech counterparts.
The other key global findings include that a record 540 companies achieved unicorn status in 2021, up from 150 in 2020, with 113 ecosystems producing at least one $1 billion behemoth.
It adds that 19 ecosystems – including Brisbane, Luxembourg, Santiago-Valparaiso and Ho Chi Minh City – achieved their first unicorns in 2021.
According to the report, North America continues to dominate the global rankings, with 47% of the top 30 ecosystems. Asia comes in second with 30%.
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