Africa’s startup ecosystems are worth a total of $6.6 billion. Of this amount, $6 billion is concentrated in five cities: Cape Town, Lagos, Johannesburg, Nairobi, and Accra.
This is one of the major findings in the Global Start-up Ecosystem Report 2021 (GSER 2021), compiled by the world-leading policy advisory and research organization, Startup Genome and the Global Entrepreneurship Network.
The 2021 GSER is based on the assessment of 275 ecosystems across more than 100 countries. The report analyses and evaluates the start-up ecosystems based on experience and talent, performance, funding, market reach, and resource attraction.
What you should know from the report
Fintech dominates early-stage investment in Africa, with over $206 million invested in the Sub-Sector between January 2018 and June 2020
Average early-stage funding in African startup ecosystems in this GSER period totaled $46.5 million, double the amount reported last year.
The report also noted that exit value in Africa totaled over $1.1 billion, with the top three in Cape Town, Johannesburg, and Durban.
According to AfricArena, a tech ecosystem accelerator, African companies are expected to raise $2.8 billion this year, with Nigeria and Kenya serving as the epicenters. African investment is expected to reach more than $10 billion by 2025, according to projections.
What they are saying
JF Gauthier Founder and CEO of Startup Genome said “The Global Start-up Ecosystem Report is the foundation of knowledge where we, as a global network, come together to identify what policies actually produce economic impact and in what context
Africa welcomed its fourth unicorn in March, and opportunities for growth swell along with that continent’s population, which is expected to reach nearly 2.5 billion by 2050.
The democratization of startups began before Covid. Now, with digitalization greatly accelerated by the pandemic, geographic constraints are largely gone. Among my most exciting, gratifying experiences has been watching the world map fill up with startup hotspots and welcoming new ecosystems onto our rankings and into our programs. This year we are creating continental sections to further shine the spotlight on these emerging regions”.
Ifeyinwa Ugochukwu, Chief Executive Officer of the Tony Elumelu Foundation (TEF) said “… In 2020, despite the ravages of a pandemic that pushed the continent into recession, the catalytic impact of entrepreneurs continued to deliver a much needed economic transformation.
To date, we have disbursed over $45 million directly into the hands of more than 10,000 young entrepreneurs from all 54 African countries as a nonreturnable seed-capital investment. These entrepreneurs have gone on to generate 400,000 direct and indirect jobs.
Although funding fell dramatically at the start of the pandemic, startups in 2020 raised $1.1 billion in 319 VC deals, according to the African Private Equity and Venture Capital Association (AVCA). That is a record and more than twice the number in 2019. The first half of 2021 looks even better, with startups raising $1.19 billion, according to data from BFA Global. That is more than the first halves of the last two years combined.”
Ugochukwu further stated that governments, eager to improve their legal and regulatory frameworks to support tech entrepreneurs, are introducing legislation providing things like tax incentives, streamlined processes, and one-year leave periods for entrepreneurs with the right to return to their previous jobs. Tunisia led the way in 2018 followed by Senegal. Nigeria, Rwanda, Ghana, Kenya, and other countries are working on their own versions.
The report concluded that the top five performers in the African tech ecosystem were Cape Town, Lagos, Johannesburg, Nairobi, and Accra.