Last year was remarkable for the African tech space as startups smashed funding records by securing over $300 million in investments. This is according to the annual African Tech Startups Funding Report 2018 released by news and research portal Disrupt Africa, which is now in its fourth year.
The report, which tracks the total amount of funding raised by African tech startups each year, found that 210 startups raised a total of US$334,520,500 in funding in 2018. This represented the best year since the records began, and a substantial leap in 2017. The number of startups that raised funds grew by 32.1 percent and total funding increased by an impressive 71.5 percent.
“The African tech space continues on its upward trajectory, with more startups than ever before securing record levels of funding in 2018. Investment levels are not the only way of gauging the health of local ecosystems, but they are a valuable way of following the sector’s progress and demonstrate that, increasingly, if you have an innovative tech solution to a problem, with a strong business model, there are pathways to funding should you require it to scale,” co-founder of Disrupt Africa, Tom Jackson said.
Nigeria is Africa’s startup funding hub
The report revealed that Nigeria emerged as the premier investment destination on the continent. With 58 startups raising a total of $94,912,000 in investment, the country claimed top spot as Africa’s startup funding hub. South Africa, which had topped the list for several years, fell behind with 40 businesses raising $59,971,000. While Kenya ranked third in terms of the number of startups that raised funds.
However, as investors increasingly look beyond the traditional “big three” startup ecosystems, other African countries are emerging as viable alternative destinations for funding. Whereas in 2015, South Africa, Nigeria and Kenya accounted for more than 80 percent of total funding raised, in 2018 that fell to 61.8 percent.
This is largely influenced by Egypt’s rise as a destination for funding, with the country’s startups raising $58.9 million in 2018, clearly establishing it as a leading startup hub on the continent. Companies in 16 other African countries also secured investment.
By sectors, the financial technology space continued to dominate, remaining a clear favourite among investors. The sector secured $132.75 million, accounting for 39.7 per cent of total funds raised. Although it was an increase on previous years, there are strong signs of progress in other sectors, with multiple ed-tech, e-commerce, e-health, transport, logistics and agri-tech startups raising funding as investors saw opportunities in many areas.
“It has been an incredible year for tech startups in Africa – and it’s a real pleasure to release this report and the impressive figures it contains. The continent’s entrepreneurs have grabbed the attention of investors, accelerators, and media both locally and globally this year with their innovative solutions and business models, and it’s great to be able to report on such strong results across our ecosystem,” said Gabriella Mulligan, co-founder of Disrupt Africa.