This is according to the recently released StartupBlink Ecosystem Index Report 2021, a global startup ecosystem map with tens of thousands of registered startups, co-working spaces, and accelerators. By evaluating innovation ecosystems in 100 countries and 1,000 cities globally, StartupBlink ranks locations according to the quantity and quality of start-ups and supporting organisations and factors related to their business environment, including ease of doing business and investment.
Within Africa, the report showed that Central Africa had no representation in the rankings, while Eastern Africa grew from 4 to 6 countries in the global top 100.
South Africa has the most developed startup ecosystem in Africa, ahead of Kenya, Nigeria, and Rwanda.
Southern Africa had a good year; not only did South Africa join the global top 50 this year, but a second Southern African country (Namibia) joined the rankings.
Northern Africa kept its three representatives in the global top 100, yet two of the three nations (Tunisia and Morocco) declined in rank.
Finally, Western Africa had a good year, where all ranked countries (Nigeria, Ghana, and Cape Verde) improved their rankings. To sum up, results are quite diverse across the sub-regions of the African continent.
- For the first time since this report was published, an African country (South Africa) made it to the top 50.
- There was also a notable increase in Africa as Nigeria moved up five spots to now rank 63rd globally.
- Egypt moved up 11 spots to rank 70th
- The Nigerian city of Lagos has become the top African startup ecosystem, ranked 122nd after switching places with Nairobi, Kenya, which now ranks 136th.
- For the first time in the ranking, and completing the top 100, Namibia is ranked 99th, and the vibrant seed ecosystem of Ethiopia is ranked 100th globally.
Below are the Top 5 African countries with the most developed startup ecosystems according to the recently released StartupBlink Ecosystem Index Report 2021.
Funding Start-ups in Africa
SHOW ME THE MONEY
More than $4bn of funding has been raised by start-ups in Africa through 754 deals $100k & over this year!
Nigeria Unicorn Capital and Egypt Powerhouse
In November 2019, three fintech companies, Interswitch, OPay and PalmPay, raised a cumulative $360 million from American and Chinese investors. That announced Nigeria as Africa’s unofficial capital for fintech investment and digital finance startups.
Fintech opportunity in Nigeria is the largest on the continent. With over 40% of Nigerian adults having bank accounts and digital payments hitting more than $250 billion in 2019, it’s no surprise that the startups facilitating transactions for the unbanked (OPay) and providing gateways (Interswitch and Flutterwave) are now worth more than $1 billion.
The three companies, including Andela, started operations in Nigeria’s commercial city, Lagos, earning Nigeria the status of Africa’s unicorn capital in 2021.
For a long time, Nigeria has been one of the three countries that receive the bulk of local and international venture capital, including Kenya and South Africa. The three countries present Africa’s most connected populace and growing economy; the perfect environment to attract foreign capital before others.
But then Egypt stepped into the picture in 2017, and with time, the North African country became part of the “Big Four” as the country began attracting venture capital eyeballs. And after quietly spending the last couple of years at the rear, Egypt picked up impressively in 2020 and this year surpassed Kenya to become the region’s third most active investment region.
As this report aptly put: “Seemingly from nowhere, Egypt is suddenly on the radar as a key African startup funding destination, highlighting the prospects for continental growth of the nascent sector.”
Egypt also has bragging rights in producing the first SPAC deal on the continent. In July, Cairo and Dubai-based ridesharing company Swvl announced that it was going public via a merger with Queen’s Gambit Growth Capital. It’s a deal that will value Swvl, one of the country’s success stories, at almost $1.5 billion once completed.
With a large population and impressive GDP per capita, the North African country raised almost $600 million this year. While it’s less than what Nigeria and South Africa raised at over $1.4 billion and $830 million, respectively, some observers predict that Egypt will surpass South Africa by next year if it keeps up with its pace.
There are a few reasons behind this thinking. In Nigeria, South Africa and Kenya, fintech is the sector that receives the most funding. The major sector is e-commerce and retail in Egypt, but the country is a hot spot for fintech, too, evident in holding the highest pre-seed rounds in both categories (Rabbit’s $11 million and Telda’s $5 million rounds).
Most of you won’t be too surprised to find the “Big Four” usual suspects (Nigeria, South Africa, Egypt and Kenya) dominate the charts with 80% of the total raised on the continent so far this year (35% for Nigeria alone!). Next in terms of total amount raised are Senegal ($222m) and Tanzania ($96m), with a very big difference compared to the Big Four though: in both cases a single deal represents more than 90% of the total raised this year (Wave and Zola Electric). With 18 and 5 $100k+ deals respectively, they are far behind the Big Four: Nigeria boasts 200+ deals; the other three 100+ deals each.
Eight countries on top of Tanzania have seen between $10m and $100m raised in 2021TD, with strong disparities though: for instance, start-ups in Ghana have raised close to 40 deals this year so far, while the $30m raised in Algeria come from one single deal (announced yesterday). You then have an extra nine countries with $1m to $10m raised, followed by a final seven with less than $1m raised, often through one single deal – except in Zimbabwe (6 deals) and Botswana (2).
Finally, it is worth noting that despite initially allocating Chipper Cash’s $100m + $150m = $250m to Ghana, we have decided not to pin them to a specific country as its Ghanaian and Ugandan co-founders and its African HQs split between Ghana and Kenya make it quite pan-African, which is probably an interesting trend to watch in itself…