Startup tracker, Africa: The Big Deal’s figures show that since 2019, west African startups have hauled in $4.2 billion, representing 41% of the total funds logged in Africa in that period.
“Startups in the region have attracted more funding than in northern and eastern Africa combined during the period,” its weekly analysis read in part.
This is in part thanks to Nigeria which gobbled up over 86% of the funds raised in west Africa, during the period, making the populous nation the continent’s most vibrant VC market.
According to the Deal, that’s 6 out of every 7 dollars raised in west Africa.
“In 2021 for instance, startups in Nigeria raised the same amount ($1.6 billion+) that was raised by all startups in Africa in 2020,” it said.
This comes as preliminary data indicates African startups will have raised more than double in the first half of 2022 what they had raised in the first half of 2021.
Nigeria dominates startup funding in west Africa
However, Nigeria is not alone as a startup investment destination in west Africa. The report pointed out two other up-and-coming startup ecosystems-Ghana and Senegal.
“Ghana ($279 million since 2019, 7% of the regional total) did not grow much YoY between 2019 and 2021; however, it has had an extremely strong start of 2022 with more funding raised in 5 months ($143 million through 24 deals) than it had raised in the previous three years combined.”
The Deal notes that this haul remains the only 9-digit deal in the region so far outside of Nigeria (which recorded 11 of those since 2019.)
Senegal as an attractive investment destination
Senegal has become an attractive VC market despite its relatively small size, buoyed by the Digital Senegal 2025 Strategy Act.
The Act aims to create a better environment for innovation and entrepreneurship by providing tax breaks and reducing the legal complexities of business regulation for startups and small businesses.
According to the multinational professional services network, Deloitte, Senegal’s tax code reform has helped attract foreign direct investment to the market, while the government is also introducing a new development model.
A $1.3 billion commuter railway unveiled in December shows that reform is underway in both physical as well as regulatory areas.
Nigeria, Ghana, and Senegal have claimed 99% of west Africa’s startup funding since 2019.
“So far the region has been performing really well compared to last year with just short of $1 billion raised between January and May 2022, to be compared with $342 billion in the same period last year,” the Deal revealed.
Nigeria, Kenya, Egypt and South Africa dominate African startup funding
Figures from startup data platform Magnitt show that Nigeria once again outperformed the rest of the African “big four” startup investment destinations, in the first quarter.
“$437 million was raised in venture funding in Nigeria over the first quarter of the year; signifying a strong start for the ecosystem.”
Nigeria was just ahead of Kenya, with Egypt in third place and South Africa last.
“Driven by 1 Mega Deal ($100 million+) the Kenya ecosystem observed a 155% growth in funding since FY’21 to cross the $400 million mark for the first time” the platform reported.
Egypt, while behind the two front-runners, once again experienced exceptional growth.
“Growing by 457% compared to Q1 2021, the $156M raised in the first 3 months of 2022 was 13% higher than the total capital invested in FY 2019 and 79% higher than that of Q4’21 reported in January” Magnitt reported.
Egypt’s startup ecosystem grew by 176% year-over-year in 2021.
Meanwhile, South Africa recorded $115 million in raises for the first quarter. A deterioration in world markets is likely to see a fall-off in VC investment in Africa, so the full-year picture for 2022 could well change.