Nigeria’s tech startups raise $114.6m in 2017

Country ranks third as investors eye Rwanda, Senegal and Uganda
Out of the $560 million technology startup investments that entered Africa in 2017, Nigeria earned $114.6 million.

The country ranked third after South Africa and Kenya, which got $167.9 million and $147 million respectively. The three countries accounted for 76 per cent of the total funding that came into the region last year.

Technology startups are young companies, mostly entrepreneurs, which are just beginning to develop.

The Global System for Mobile telecommunications Association (GSMA), which revealed these figures at the just concluded Mobile 360 Conferences in Kigali, Rwanda, noted that lately, investors’ attentions have tilted towards countries including Ghana, Rwanda, Senegal and Uganda.

This reason, according to GSMA was responsible for the cut in investment from 80 per cent in 2015 and 2016 to 76 per cent in 2017 in South Africa, Kenya and Nigeria. While Rwanda got $36.7 million, Ghana had $20.4 million, Uganda $16 million and $Senegal $10.7 million fundings last year.

GSMA said investment in the region’s tech startup ecosystem is growing, adding that in 2017, 124 tech startups across Africa raised a total of $560 million, a 53 per cent increase over the previous year.

Of this, sub-Saharan Africa accounted for around $515 million in more than 100 deals. The range of tech startups funded and the growing size of deals reflect the accelerating development of the ecosystem.

It explained that Fintech (21 per cent), solar (21 per cent), e-commerce (19 per cent) and edtech (12 per cent) accounted for the highest shares of investment. This underscores the increasing innovation and investor interest in solutions that address the region’s starkest social challenges, such as limited access to financial services, education and energy by large swathes of the population.

In October 2017, Ugandan solar startup SolarNow secured a $6 million debt facility to help it reach more customers and expand access to pay-as-yougo (PAYG) solar power.

“Kenya, Nigeria and South Africa remained the most popular investment destinations, accounting for 76 per cent of total funds raised by startups in the region. However, the downward trend in the combined share of investments for the three markets, from more than 80 per cent in 2015 and 2016, shows growing investor appetite for other markets, notably Ghana, Rwanda, Senegal and Uganda,” GSMA stated.

GSMA also revealed that in Africa, technology hubs increased from 89 in 2016 to 133 in 2018 in SSA. South Africa currently has 59 technology hubs, Nigeria 55, Kenya 30, Ghana 24, Uganda 16, Cote d’Ivoire 13, Zimbabwe 13 and Senegal 12.

The body, which represents the interest of over 800 operators across the globe, said tech hubs are a critical part of the tech startup ecosystem, saying they promote ideas and collaboration locally and provide startups with business support resources and services to help them scale.

In all of these, GSMA observed that SSA has a fast-growing tech startup ecosystem, which plays an increasingly important role in the development of homegrown digital content and services. It stressed that mobile has remained a key factor in the region’s startup ecosystem. It stressed that many tech startups now use the technology as the primary platform to create solutions that address various socio economic challenges.