African digital nuggets are gaining in prominence and taking the next step. With a 33% increase over 2015, startups on the African continent raised $367 million.
Attracted by the media hype around “African tech”, international investors are now actively involved in financing startups on the continent. This is evidenced by figures released by the venture capital fund Partech Ventures, based in France, the United States and Germany.
Figures that speak for themselves
According to Partech Ventures, in total, 77 African startups raised $366.8 million from investors in 2016, a net increase of $276 million. This equates to a 33% increase over 2015.
To establish these figures, Partech Ventures, an investment fund, counts fundraising over $200,000. Investments below this floor were not considered, as they are difficult to track. Partech Ventures also believes that as soon as a startup innovates and creates value in the African market, it should be considered as African even if its headquarters are outside the continent. For example, Flutterwave, a pan-African payment solution founded by a Nigerian entrepreneur, Iyinoluwa Aboyeji, is headquartered in the United States.
Nigeria, South Africa and Kenya: the winning trio
This major step forward is being led by Nigeria, whose technology companies attracted nearly $109 million in 2016. There is now talk of a “Yabacon Valley” around the Yaba district in the suburbs of Lagos. There are a large number of startup incubators. After Nigeria comes South Africa, which has received $96.7 million in 28 fundraising rounds. Kenya, on the other hand, came in third on the African podium, with $92.7 million raised by 21 startups from the “Silicon Savannah”.
“These three leading countries still attract the vast majority of tech investment on the continent. The other countries, which are engaged in digital innovation that is just as structuring, remain under-represented and therefore represent an untapped opportunity for investors,” explains Cyril Collon, general partner at Partech Ventures and co-author of the study alongside Tidjane Deme, former director of Google in Francophone Africa.
On the sectoral trend side, African “Fintech” is at the top, with 19% of the investment flows recorded for the year 2016. The “Edtech” sector (digital technology for education) accounted for 8% of flows, while the “HealthTech” sector accounted for 2.5%.
Innovations in the off-grid sector are on the rise
The real surprise comes from the so-called “off-grid” sector, where innovations combining solar energy and digital technology are multiplying. The volume of investment represents 36.6% of the continent’s total fundraising. This sector has seen a rise in applications that democratize access to energy. For example, there are agile “pay as-you-go” solutions that allow users to pay only for the amount of energy they consume on a daily basis.
Source : LeMonde