This archive report was first published on 25 November 2019.
Published on November 25, 2019, African startups made a significant leap in 2019, raising over $1.1 billion in funding. This surge in investment is a testament to the growing interest in the continent's young companies.
However, despite the promising figures, there are disparities in the distribution of funding across genders, sectors, and geography. The majority of the funding went to Nigeria, South Africa, and Kenya, with the three nations taking over 75% of the total funds.
Nigeria alone took up $597 million, through 18 startups, while South Africa followed with 25 startups taking $112.3 million, and Kenya came third with $107.7 million distributed among 12 startups.
Major beneficiaries of the $1.1 billion funding include Nigeria's Opay, Interswitch, and Andela. Interswitch led with $200m, while OPay and Andela followed closely with $170m and $100m respectively.
Despite the growth in fintech, Francophone countries were left out, with only three startups from these nations receiving over $1m in 2019. The World Bank notes that most mature entrepreneurial ecosystems exist in anglophone countries, which may contribute to the disparity.
Even among the main countries, a few companies took up significant portions of the funding. For instance, Opay, Interswitch, and Andela took up over half of Nigeria's funding and over a quarter of the total $1.1b.
Disparities also appear across sectors that receive funding, with fintech on the lead and water sector on the tail end. Fintech alone took up $555m, half of the amount, while water took only $1.5m.
Transport and Logistics startups took up $122m, with investment in fintech continuing to grow to cater for Africa's majority unbanked population, leveraging on mobile and internet services.
The fact that very few agriculture startups received over $1m in funding in 2019 is a matter of concern. Mckinsey cites that 60% of sub-Saharan Africa's population are smallholder farmers, and the continent sources 23% of its GDP from agriculture.
Even as startups continue to scale in the continent, leadership in these organizations is far from level ground. For instance, out of the 77 startups with over $1m in 2019, only 15 were co-founded by women.
