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Nigeria is Now Africa’s Foremost Destination for Investment in Startups

Nigeria’s startups attracted more funding from investors in 2018 than ventures in other African countries. This was revealed in a report recently published by Disrupt Africa, an online medium tracking the progress of the continent’s startup scene.

In what may be seen as a validation of the strides made by startups in the Nigerian tech ecosystem, the report shows that 58 of them received a total of over $94,912,000 in funding in the year just passed. This figure dwarfs South Africa’s, which saw 40 of its businesses attract $59,971,000 in investments in the same period. It’s the first time Nigeria’s startups have gotten more financial support from investors since records began.

Disrupt Africa’s African Tech Startup Report for 2018 indicates that funding made available to the continent’s startups last year summed up to $334 million, far more than it’s ever been. This was channeled to 210 startups in more than a dozen countries, a huge fraction of them being in Nigeria, South Africa and Kenya. Significant funding activity was recorded for ventures in Egypt as well.

Fintech startups are said to have taken a large share (39.7%) of the funds, as they’ve been doing in recent years. Lured by the promise of impressive returns on investment, angel investors and venture capitalists have swarmed around the better-known names on the scene. This was the case for Nigeria as well, with Piggybank, Paystack and CowryWise being top beneficiaries.

However, there’s been interest in other startups as well. Agritech has drawn in more savvy money from organizations eyeing Africa’s vast barely tapped potential in that area. Think the $325,000 put into FarmCrowdy by GSMA, a stake made public last February. This is also true for e-health, as the $200,000 staked on LifeBank showed. Transport and Logistics have gotten a good push elsewhere on the continent.

The $334 million investment recorded for African startups in 2018 was a big improvement on the $195 million they took two years ago (which was itself a record-breaking figure until last year). While Nigeria, South Africa and Kenya continue to take the lions’ share of the finance, startups from other countries are beginning to get noticed too. Disrupt Africa’s report shows that while these three countries accounted for 80% of investment in 2015, they now shared less than 62% of it.

If the signs early on in 2019 are anything to go by, there’s a chance that these figures could be further eclipsed this year. There’s already been a hefty $100 million investment in Andela, the African software development outsourcing startup started off in Lagos in 2014. It’s not far off from a third of all that was raised across the continent in 2018. Given the potential for growth which still exists, it’s unlikely that last year’s high will remain the peak for long.

Another thing that’s been mentioned in reports elsewhere is the fact that local funding for startups is starting to pick up. International venture capital firms remain the chief contributors, but Nigerian investor firms are playing an increasing role as well. Alitheia Capital, Leadpath, and Ventures Platform were lead in this regard.

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Ikenna Nwachukwu

Ikenna Nwachukwu holds a bachelor's degree in Economics from the University of Nigeria, Nsukka. He loves to look at the world through multiple lenses- economic, political, religious and philosophical- and to write about what he observes in a witty, yet reflective style.

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