African startups raised R1.7 billion in funding throughout 2016

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Earlier this week Disrupt Africa released its African Tech Startups Funding Report 2016 and there’s good news to be found.

First and foremost the African tech startup scene cannot be described as “small”. Funding raised through investment totalled $129 million (~R1.7bil) with 16.8% more startups securing funding than in 2015.

Disrupt Africa’s Tom Jackson tells us that while the growth was expected its fruition is evidence of increasing popularity in the Africa tech space.

“The fact is investors are becoming increasingly interested in African tech, sensing opportunities for financial returns and also the potential to make a positive impact on the development of the continent,” says Jackson.

“We are seeing more rounds at an earlier stage, and more startups from outside the traditional hubs raising investment, which is encouraging.”

South Africa, Nigeria and Kenya were among the most popular destinations for investors. These three nations collectively accounted for 80.3% of the funding generated by the continent.

While sectors such as transport, marketing, agri-tech and recruitment are popular sectors for investors, fintech is by far the most popular investment sector.

“Fintech is the most popular, due to its ability to marry the potential financial returns with positive social and economic impact,” says Jackson.

Room for (more) growth

Just behind the powerhouses of SA, Nigeria and Kenya, Egypt is the fourth most attractive destination for investors. The nation saw a 100% growth in fundraising in 2016 helped along by government support and an increasing number of investment funds.

“Egypt was always a popular destination for investors, but this tailed off after the political issues over the last few years. Investors are now returning, as Egyptian startups are amongst the most innovative on the continent and the market is a very strategic one,” Jackson explains when asked why Egypt has seen such incredible growth.

Disrupt Africa foresees even more growth throughout the course of this year as the angel investment scene strengthens and overseas investors look to Africa.

As Jackson explains it, Africa is the final digital frontier and presents an immense opportunity for growth given that the market is still largely unsaturated. “The growing middle class and consumer spending power on the continent is also a huge attraction,” says Jackson.

Here’s to a fantastic 2017 for all the African startups and congratulations on the achievements in 2016.

[Image – CC BY 2.0 aisletwentytwo]

Brendyn Lotz

Brendyn Lotz

Brendyn Lotz writes news, reviews, and opinion pieces for Hypertext. His interests include SMEs, innovation on the African continent, cybersecurity, blockchain, games, geek culture and YouTube.