Start-ups funding in 2017: Nigeria falls behind South Africa, Kenya - Sundiata Tech


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Friday, January 5, 2018

Start-ups funding in 2017: Nigeria falls behind South Africa, Kenya

Nigeria is once again behind South Africa and Kenya as the destination of major funding for start-ups on the African continent between the periods of January to December 2017, says a study conducted by WeeTracker Research.

South Africa took the top position as 74 of its start-ups got funding in the calendar year. Kenya which came second accounted for 46 start-ups that secured funding and Nigeria had 34 start-ups. Collectively, the three countries accounted for 77 percent of the total number of funded start-ups, for the third year running.

The study revealed that 201 African start-ups pooled $167.7 million in disclosed risk capital between January and December 2017.

“The disclosed funding announcements have shown an increased growth of 28 percent year-on-year (YoY), compared to the last calendar year (2016). Not only this, the number of start-ups that got funded in 2017 has also jumped by 32 percent compared to last year,” WeeTracker noted.

The year also saw the establishment of several new foreign incubators and accelerators such as Startupbootcamp and MEST in Nigeria and South Africa. There were also new funds similar to 500 Start-ups, Omidiyar Network and others that came on the scene.

“Foreign government that wanted an early share of the pie brought a corpus of $90 million to be invested in the continent with initiatives like CoCreate SA of Netherlands and French-African Fund. With different firms, organisations, and individuals coming to support financially, the startup funding activity in Africa is expected to witness a significant spike,” WeeTracker stated.

South Africa took the lead in terms of the funding amount as $39.60 million was invested in its start-ups, while Kenyan start-ups attracted $31.4 million in investment and Nigeria rounded off the top three with $24.2 million. Andela, a New York-based software development and training company with offices in Nigeria, Kenya and Uganda raised $40 million during the same year.

Financial technology (Fintech) companies were the major attraction according to the study as they closed as much 47 deals worth $30.68 million and representing 18 percent of the total funding secured.

Flutterwave, a payments company that builds infrastructure to ease payment process – founded by Nigerian Iyinoluwa Aboyeji, secured the most funding with over $10 million in a Series A round from two investors.

Seed stage investments retained the top position with number of deals at 72. Venture capital and grants were the most favoured investment types with number of deals standing at 35 and 30 respectively. Nigeria’s Tizeti, an internet service provider secured the most seed money deal with an investment of $2.1 million.

“Venture Capital as an asset class is slowly recognised as one of the catalyst to drive innovation, employment creation and growth,” said Andrea Bohmert of Knife Capital, “We should expect increased investment activity. Angel investment will also come “out of the closet” with “Angels” becoming more visible, co-investing with other Angels or even VCs.”


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