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8 Things You Didn’t Know About African Tech Startups Funding

8 Things You Didn’t Know About African Tech Startups Funding

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Tech startups are all the rage these days, and Africa is not missing the boat in this regard, providing the tech sector with an abundance of great businesses geared at taking on challenges and finding innovative solutions to help people overcome these challenges.

The Disrupt Africa African Tech Startups Funding Report 2015 by Disrupt Africa sheds light on the trends that have taken shape on the continent with regards to capital made available to startups in Africa.

The nature of startups means that funding can often be an issue, but new African tech companies continue to attract investment, allowing them to develop their intellectual property and build their brand in Africa and around the world.

Here are 8 things you probably didn’t know about funding for African tech startups:

Sources: Disrupt-AfricaTechCrunch, ITNewsAfrica, Forbes,  HTXT

Thinkstock
African startups received funding to grow – Thinkstock

$185-million was entrusted to African startups in 2015

The year 2015 was certainly a positive year for startups in Africa from a funding point of view. The latest statistics in the African Tech Startups Funding Report 2015 done by Disrupt Africa revealed that 125 African tech startups received funding that amounted to $185 million last year, providing these businesses with the financial backing needed for their sustained growth on the continent.

image: businessinsider.com
SA saw the most investment in tech startups – image: businessinsider.com

South Africa attracts the most startup investment

The Rainbow nation continues to be one of Africa’s top tech startup countries according to the Disrupt Africa report, attracting the biggest chunk of the $185 million in capital during 2015. A total of $54.5 million or 36 percent of the pie went the way of SA, with Nigeria attracting $49.4 million, or 24 percent of the total investments. In third place on the continent, Kenya saw $47.3 million or 14.4 percent going to the East African country.

M-pesa Agency
M-Pesa making waves in Kenya

Mobile payment innovation taking East Africa by storm

Africa’s tech startups have often focused on mobile payment innovation, with East Africa in particular, providing a leading light in terms of this technology. This is due to the lack of access to formal financial infrastructure in countries such as Kenya, Uganda and Rwanda. An offering from Safaricom known as M-pesa, is now used by more than 20 million Kenyans, and announced earnings of $190 million at its financial year end in September, 2015. Many other similarly focused startups are attracting interest and capital in the region.

solar farm Nigeria
Solar is big business in Africa – Thinkstock

Solar and Fintech dominates interest

Out of all of the industries served by the tech inspired startups in Africa who received funding in 2015, the solar and financial tech sectors saw the most activity. The Disrupt Africa report reveals that solar sector attracted 32.9 percent of the total investment, or $61.1 million, with Kenyan and Tanzanian startups, such as Kenya’s M-Kopa Solar, contributing greatly to this stat. The fintech industry came saw 29.6 percent of the total funding, with South Africa providing over half of the companies involved in that industry.

Image: techmoran.com
Jumia raised $150 million in 2014 – Image: techmoran.com

2014 was a year for big deals in Africa

While the stats for 2015 are impressive, and 2016 is expected to experience further growth on these numbers, 2014 was a particularly stand-out year in terms of bigger investments attracted by single companies. Jumia raised $150 million in 2014, while during the same year South Africa’s Takealot secured $100 million, and Konga a figure of $40 million. To compare, the biggest single investment of 2015 was $5 million for Nigeria’s DealDey from Investment AB Kinnevik.

MTN Fine
MTN is supporting the continent’s first startup unicorn – cctv-africa.com

Africa’s first startup unicorn

Africa Internet Group (AIG), the owners of online retailer Jumia and 9 other e-ventures, is set to become Africa’s first startup unicorn. AIG recently announced $326 million in funding from the likes of Goldman Sachs and MTN, amongst others. AIG CEO Sacha Poignonnec admitted that these recent investments mean that the company’s equity is now around $1.08 billion.

broadband africa shutterstock_128237849 East Africa's broadband boom | BiztechAfrica Mobile,Technology ... www.biztechafrica.com
Africa is becoming a startup hub

Other African countries stepping up their startup game

While the African Tech Startups Funding Report 2015 by Disrupt Africa found that the most investment into the African startups went the way of South Africa, Nigeria and Kenya, the report also suggests that lucrative deals were made which allowed for capital to be raised in Egypt, Ghana, and Tanzania. This bodes well for an ever-growing startup culture on the continent as a whole.

wiki.usask.ca
Drone tech in Africa – wiki.usask.ca

African commercial drone startups ready for investment

Commercial drone startups have started to find success in Africa, with a variety of opportunities in certain industries set to attract investment. The services of Ghana’s Aeroshutter include aerial photography, commercial property surveillance, and advertising. South Africa’s Rocketmine offers “aerial data solutions” in the fields of mining, agriculture, and civil engineering, and according to their CEO, Chris Clark, they are expecting to make around $1 million in revenue during 2016.