SA grabs lion's share of Africa's startup funding

2016-02-23 13:18 - Memory Mataranyika, Fin24
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Western Cape start-up incubator. (Duncan Alfreds, Fin24)

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Harare - South Africa is the most favoured destination and hub for tech startup funders in Africa, a new report has shown.

Startups across Africa have raised as much as $185.7m in 2015, according to the African Tech Start-ups Funding Report released on Monday by Disrupt Africa.

“2015 was an exciting year for African tech start-ups. Our data shows the increasing vibrancy of our ecosystem, with more quality tech startups, and more investor activity than ever before,” said Gabriella Mulligan, co-founder of Disrupt Africa.

Of all the startups surveyed that raised $187.5m in investment funding, 36% are from SA, 24% from Nigeria and 14.4% are from Kenya.  

The report further showed that SA is ahead of Nigeria and Kenya in terms of the tech startup funding raised in 2015. SA startups raised $54 568 000, Nigerian start-ups received over $49 404 000; while Kenyan start-ups raised about $47 365 000.

The solar sector was the most attractive for investors as it accounts for about 32.9% of total funds raised. The financial technology sector was closely behind with 29.6%.

African tech startups

“These are … numbers, showing real growth in the amount of funding available to African tech startups, but in reality they are merely the tip of the iceberg,” said Tom Jackson, co-founder of Disrupt Africa.

“There will have been many funding rounds across the continent that have taken place quietly. We expect to see further growth in 2016,” he added.

Other African countries that are attractive for tech startup funders are Egypt, Ghana, and Tanzania. The increase in funding available is in line with rapid tech developments and advancements that are happening across the African continent.

Earlier this year, international research firm Gartner said it was looking for African tech startups to showcase their projects at the Aspiring Innovators Programme at the annual Gartner Symposium/ITxpo Africa in Cape Town in September.

Gartner said it was looking for African based tech startups that are still in their early stages and employ fewer than 50 employees. Selected solutions would have to support B2B (business to business) and corporate B2C (business to consumer) systems and already have at least two clients.

Despite revelations that more and more funding is being channelled toward tech startups in Africa, analysts say “a lot more other start-ups are folding up” because they lack access to funding that enables them to get off the ground.

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