”Technology startups and the venture capital ecosystem that transforms ideas and fledgling companies into disruptive businesses are growing globally.”
It is no doubt that there’s been an increase in the number of startups in Africa and it has been observed that the startups with the highest amount of funding have been fintechs, healthtechs, e-commerce and cleantech.
In this article, I attempt to take a closer look at startups in Africa, how startup funding has progressed within the continent and what kind of startups are the most successful and why.
According to Tech Crunch, an American online newspaper focusing on high tech and startup companies,in 2021, there was a global investment of $300 billion in the startup ecosystem which resulted to produce close to 800 million unicorns across the globe. Within the first nine month of 2021 Africa witnessed its first four unicorns raising the value of African startups to $2 billion from $400 million in 2014.
What led to the increase in the value of African startups and what kinds of startups facilitated it?
The continent enjoys a fertile environment for tech entrepreneurs due to the its youthful and growing population, rising internet penetration, and the application of emerging technologies that have the potential to improve access to healthcare, financial services, education, and energy, which explains why the most successful startups are fintechs, healthtechs and e-commerce with Nigeria, Kenya and Egypt being the countries with startups having the most funding.
With the increase of startups within the continent do you ever feel like the ecosystem may be getting saturated? Sometimes I do,but even though startups are usually small companies they usually play a significant role in economic development. They are often centres for innovation, they create more jobs which equals to more employment which generally drives up the economy and just as Microsoft changed Redmond, startups often have a direct impact (positive) on the cities that they make their own.
Although startups within the continent continue to face problems such as difficulties in raising startup capital, poor infrastructural development,and government policies, they have continued to progress with the advantage of technology and the population, giving them the chance to be able to disrupt regular markets, provide superior services and generate revenue.
So the increase of startups in Africa is beneficial to the continent as they serve as positive economic drivers, make life easier for individuals who make use of their services and when they get bigger, contribute to the circular flow of income within the economy.