In 2016, African or Africa-focused startups raised between $129 million and $367 million, according to reports from Disrupt Africa and Partech Ventures.

Perhaps unsurprisingly, given promising macro trends across African markets (e.g., increasing mobile/smartphone/internet penetration rates, a gradual rise of the middle & consumer class, rapid urbanization, and strong working-age population growth), the momentum continues into 2017 with entrepreneurs and investors in Africa & beyond continuing to explore and exploit opportunities for progress and profit across the continent.

Africa-Focused Ventures Receiving Significant Funding in 2017

The list below, while non-exhaustive, provides a relatively thorough overview of tech- and internet-enabled ventures operating in Africa that raised significant equity funding ($500,000 and up) in the first half of 2017, plus July:

Tanzania’s Jamii, an m-health insurance provider, also raised a $750,000 seed round, reportedly comprised of 50% in grants.

Though perhaps not as driven by tech as the ventures above, it’s also worth noting that Kenya’s Africa Logistics Properties, a developer, acquirer, and manager of logistics warehouses, raised $4 million from Dutch family office, DOB Equity, and Nigeria’s Tomato Jos, an agricultural production company, raised $2.1 million from VestedWorld.

In addition, Tala and D.Light, which target African markets but have significant operations elsewhere, also received funding in 2017. Tala, a provider of smartphone-based micro-loans, raised a $30+ million Series B round led by Silicon Valley’s IVP, with participation from New York’s Collaborative Fund & Lowercase Capital, and others, and D.Light, an off-grid solar energy solutions provider focused on Africa & Asia, raised $5 from Norway’s Norfund. (Iflix, a subscription video-on-demand service, and Taxify, a ride-hailing Uber competitor, which are both present in African markets, also raised significant rounds.)

Emerging Themes

Looking closely at the list above, a few themes emerge:

  • Fintech in Africa, particularly payments and lending, is red hot.
  • Fintech players Flutterwave, BitPesa, Alternative Circle, and Ensibuuko all raised significant amounts in 2017. With Africa-focused fintech startups raising $30-70 million in 2016 (approximately one-fifth to one-fourth of total funds raised by African startups in 2016 across all sectors), including Zoona’s $15 million Series B and Branch International’s $9+ million Series A, the sector continues to receive significant investor attention. In all, African fintech startups have raised in excess of $100 million since 2015.

  • Some international investors are betting big on Africa.
  • Among the list of investors above a few names are quite active in Africa, appearing multiple times. Draper Associates, led by Tim Draper, invested in both BitPesa and Bamba in 2017. But that’s not all. Tim Draper was among the earliest investors in Nigeria’s Paga in 2012, and through Draper Dark Flow, alongside Toro Orero, he has invested in various startups across the continent including Nigeria’s Paystack, South Africa’s SweepSouth, and Ghana’s Swiftly. (Draper and Orero are also involved with the African Startup Institute, launching in March 2018, which will offer personalized entrepreneurial training in Lagos, Nigeria.)

    New York’s Greycroft Partners also appears multiple times, with Ian Sigalow, Partner & Co-Founder, saying recently:

    We’ve always believed in the potential of the market. I expect we make more investments in Africa over the next five years than the last 10.

    In addition, Silicon Valley’s Y Combinator, Soma Capital, & Social Capital, as well as San Francisco’s Lynett Capital (also an investor in Flutterwave’s 2016 seed round) all appear more than once. As does Kenya’s Savannah Fund.

  • Other Themes:
    • The emergence of strategic early-stage investments (see: Alternative Circle & EatOut)
    • Investor interest in innovative data startups (see: Bamba & Aerobotics)

In Conclusion

The fact of the matter is that Africa is one of the toughest and least forgiving capital raising environments, and the time and effort spent on it has ‘killed’ or at least really held back many great teams and ideas.
Ido Sum, Investor

While the list above makes it clear that finding funding is far from impossible for the right teams with the right ideas & execution, it should still be highlighted that access to capital, whether in ‘significant’ amounts or otherwise, is still a real issue for promising, high-potential teams across Africa.

Momentum may be starting to shift however.

Orange Digital Ventures recently announced a $55+ million investment initiative “for early-stage innovation projects in Africa.” And TLcom Capital recently closed its $40 million Tide Africa fund, “focused exclusively on technology enabled solutions and innovation serving Sub Saharan Africa (SSA).” In addition, Alibaba founder and executive chairman, Jack Ma also recently announced a $10 million African Young Entrepreneurs Fund, stating:

I want [to support] African online businesses … I think e-commerce, Internet, Big Data is the future. You can never stop it. You like it or don’t like it. But you will never stop it.

As Africa’s digital revolution proceeds, opportunities continue to abound across the continent for both intrepid investors and entrepreneurs. In many ways, the internet is indeed the future in Africa, and, undoubtedly, globally significant businesses are being and will be built on top of it.

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By Emeka Ajene

Based in Lagos, Nigeria, Emeka is the Founder & Publisher of Afridigest and leads Africreate, a strategic advisory firm that helps global senior executives, corporates, and investors take advantage of opportunities in African markets. He also connects global capital to promising Africa Tech investment opportunities via investment firm Africapital. Follow him on Linkedin and Twitter.