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South Africa's startup ecosystem dominates

South Africa's startup ecosystem dominates

African tech startups raised US$129m in 2016 with secured funding up by 16.8%, according to Disrupt Africa Report.

146 startups from across Africa raised US$129,113, 200 in funding over the course of 2016, according to the Disrupt Africa Tech Startups Funding Report 2016.

The Report found that Kenya, Nigeria and South Africa remained the three most popular investment destinations, accounting for 80.3% of funds secured. Egypt experienced over 100% growth in fundraising, making it the fourth ranked destination.

Of the nine sectors analysed in the report, the fintech sector received the most backing in 2016, with startups in this space raising a combined US$31.4 million.

New to this edition, the report also makes available data on the startup acquisitions which took place in 2016; as well as the results of surveys relating to preferences and trends within the entrepreneur and investor communities on the continent.

"The general theme of 2016 has been more rounds, but with fewer standout tickets than in 2015. The African tech space has not been immune to the economic pressures faced by other sectors, but it is proving extremely resilient. The fact more startups raised funding in 2016 than ever before demonstrates the vitality of this sector, and we expect investor interest to grow and grow over the course of 2017," said Tom Jackson, co-founder of Disrupt Africa.

Jackson said that while there has been a lot of noise about the growth of the Nigerian tech startup ecosystem, it remains behind South Africa in terms of the number of startups that raised and the total amount of funding.

"Kenya is not performing as well as many might expect, with the majority of its 26 funding rounds on very small ticket sizes. Meanwhile, it is refreshing that a greater percentage of funding went to startups outside the "big five" - SA, Nigeria, Kenya, Egypt and Ghana - than last year," he added.

"There has been economic constraints in a variety of sectors globally, and the African tech space is not immune. However, it continues to hold its own, and withstand these pressures better than other sectors. It seems we are seeing the end of what investors call "irrational money", and more funding rounds for more startups at an earlier stage,"

The expectation is that Africa will continue to show growth, and according to Disrupt Africa, if the number of startups that secure investment continue to grow by 17% per year, the ecosystem will develop rapidly. Countries like Nigeria, Egypt and Rwanda will continue to grow.


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