5 Trends in the African tech funding space
The second version of the annual African Tech Startups Funding Report, published by Disrupt Africa, finds African tech funding raised nearly US$130 million in funding in 2016.
The report contains statistics and analyses for a number of African countries, in addition to 9 sectors. It also makes available information on startup acquisitions which happened in 2016; in addition to the outcomes of surveys relating to preferences and trends within the entrepreneur and investor communities on the continent.
VC4A community members can get hold of a 25 per cent discount on buying the report using the code “angelspecial” here. Beneath are 5 key traits pertaining to investments in African tech startups in 2016.
1. More startups raise less money
A total of 146 tech startups from across Africa raised funding totalling US$129.1 million in 2016, demonstrating significant progress on the previous year within the variety of firms raising money, regardless that the overall amount raised fell year-on-year.
The overall theme of 2016 was more rounds, but with fewer standout tickets. This means there’s a rising appetite to invest in African startups at an earlier stage, with the angel investment scene on the continent growing in size.
2. Peripheral markets see extra interest
Unsurprisingly, South Africa, Nigeria and Kenya remained the three hottest funding locations, followed by Egypt and Ghana. It’s clear which countries are probably the most enticing to investors.
We’re beginning to see a trickle down impact to startups in different countries, nevertheless, as investors steadily turn into more pan-African in their outlook. The share of complete funding secured by startups from outside the “big five” increased to 4.84 per cent this year from 1.3 per cent in 2015.
3. Egypt is back
Funding steadily started to return to the Egyptian tech area after a number of years in 2015, and that process continued as 2016 progressed.
The quantity of Egyptian startups that secured funding elevated by 62.5 per cent, with complete funding rising by 105 per cent. Moroccan and Tunisian startups additionally had a very good year, suggesting investors are returning to the area as it puts political turmoil behind it.
4. Fintech the biggest beast
Fintech turned the most popular sector for tech funding in 2016, with startups in that area raising 24 per cent of the overall total.
Investors clearly see big potential in tech startups to succeed in unserved or underserved populations with financial services, and are placing their cash behind such firms in their droves.
5. Impact is huge business
There’s actually a sound argument that any funding in an African enterprise is an impact funding, however sectors that very clearly fall into that class – fintech aside – had a very good year.
Whereas investments in, say, e-commerce firms fell off a cliff, other sectors shone. E-health was the third hottest category by number of startups and the fourth for complete funding. Agri-tech noticed a 8,660 per cent increase in complete funding, whereas e-learning additionally performed better. Clearly traders are searching for social impact in addition to financial returns.