According to Disrupt Africa report, African tech startups raised more money in 2017 ($195 million) than in any year.
Aside from fintech, solar companies had a good year, while agri-tech startups saw an increase in funding of over 200 per cent on 2016 figures.
The African tech startup scene will not see hockey stick growth, but rather slow and steady development.
Earlier in 2018, Disrupt Africa released the 2017 African Startup Funding Report. The report revealed that African tech startups raised more money in 2017 ($195 million) than in any year before that (since tracking began).
The report also revealed that Kenya, Nigeria and Ghana account for over 60 percent of Africa’s agri-tech market.
Business Insider spoke to Tom Jackson, Co-founder, Disrupt Africa, about the report and his predictions for the African tech startup scene.
Business Insider (BI): What was the process Disrupt Africa (DA) employed to gather the report and how did you arrive at the insights?
Tom Jackson (TJ): The African Tech Startups Funding Report 2017 is a work of journalism undertaken in-house over the course of the year.
A complete record of funding rounds was kept over the year, as they were disclosed publicly or confidentially to the Disrupt Africa team. Using that initial dataset as a base, over Q4 we polled hundreds of startups, investors, hubs and other ecosystem players to identify rounds that we may have missed, or to clarify the amount raised where this was not initially disclosed.
BI: Apart from the top performing sector (fintech) and investment destinations (Nigeria, SA, Kenya), what other key insights can you share with us?
TJ: The development of the African startup scene when it comes to funding terms goes beyond the key figures, with the continent seeing a gradual trickle down of funding into other countries and sectors.
Egypt and Ghana were both well represented by funded startups, with Ghana’s total funding increasing by almost 150 per cent year on year. Morocco and Tunisia also did well, while Ugandan tech startups also had a good year.
Investors are increasingly willing to seek out opportunities in more far-flung countries, and there is a growing appetite to find addressable markets in places less busy with investors than Cape Town or Lagos. The total share of funding secured by startups from South Africa, Nigeria and Kenya continues to fall.
Aside from fintech, solar companies - most of whom use mobile money-based pay-as-you-go (PAYG) technology to allow rural Africans to access solar power - had a good year, while agri-tech startups - who raised a combined US$13.2 million - saw an increase in funding of over 200 per cent on 2016 figures.
BI: Based on the report, what are your top 3 predictions for the African tech startup scene in 5-10 years?
TJ: One, the African tech startup scene will not see hockey stick growth, but rather slow and steady development as the quality of companies improves and more investors come to the party.
Two, there is a blurring of the lines between impact and returns-driven investing that will continue.
Three, we expect to see some consolidation within the space. For example, we currently have a plethora of Nigerian payments startups, far more than the market needs. These numbers will fall as startups close or are acquired, and we can expect some very big companies to develop out of this.