South Africa, Nigeria, Kenya, and Egypt have established themselves over the last few years, by various criteria, as the “big four” African tech startup ecosystems.
Slowly but surely, especially when it comes to funding, other countries are catching up, but the vast majority of activity and investment on the continent from a startup perspective come from those four markets.
But how do they actually match up? Well, having released detailed research publications on each country within the space of a year, Disrupt Africa is in a position to let you know.
The Kenyan Startup Ecosystem Report 2022 (released December 2022), the Nigerian Startup Ecosystem Report 2022 (released September 2022), the South African Startup Ecosystem Report 2022 (released June 2022), and the Egyptian Startup Ecosystem Report 2021 (released October 2021) contain key figures on numbers of active startups, acceleration levels, gender representation, employment, funding, and M&A. So how do these ecosystems compare?
Startup activity
Obviously these reports were released at different times within the space of just over a year, so some changes will have occurred, but given levels of churn comparisons here are still fair. Perhaps surprisingly, Egypt comes out on top here, with 562 active startups as of late 2021. Reports on South Africa, Nigeria and Kenya released this year found 490, 481 and 308 active startups respectively.
Biggest hubs
Though we describe these countries as leading African startup ecosystems, in all reality the majority of activity occurs in just a handful of cities. No fewer than 425 – 88.4 per cent – of the Nigerian tech startups tracked by our report are based out of Lagos, with capital city Abuja coming a poor second with just 23 ventures.
Nairobi is the dominant hub of Kenya’s startup ecosystem, with 97.4 per cent of the Kenyan tech startups tracked by our Kenya report based out of the city. An almost-as-huge huge 93.6 per cent of Egypt’s tech startups are from Cairo.
South Africa is the only one of the “big four” where activity is more evenly spread. Cape Town is often portrayed as the “startup capital” of South Africa, and indeed sometimes of the whole continent, but in terms of activity it is less dominant than you might have expected. The “Mother City” does indeed account for the largest number of startups, with 225 – 45.9 per cent – of the ventures tracked by our report active there. However, with 204 active startups, representing 41.6 per cent of the total – Johannesburg can rightfully claim to be a leading startup city in its own right.
Leading sectors
Fintech leads the way across three of the “big four”, with statistics that are remarkably similar, but there is one outlier.
Just over 30 per cent of Kenyan tech startups operate in the fintech space, almost three times more than nearest challengers agri-tech and e-health. In Nigeria, 36 per cent of the startups tracked are fintech ventures, again almost three times more than any other sector.
Fintech is also a major driver of activity within the South African startup space, with 30 per cent of companies active in that space. That is once again almost three times as many startups as there are in any other individual vertical.
In Egypt, however, e-commerce is king. Over one-fifth of the country’s tech startups are active in the e-commerce or B2B retail-tech sectors; indeed, there are almost twice as many e-commerce and retail-tech startups as there are fintech ones. In relegating fintech to a distant second in terms of startup activity, Egypt stands in contrast to its fellow continental startup leaders South Africa, Nigeria and Kenya.
Diversity divide
African startup ecosystems may be on the rise, but, like elsewhere in the world, they still perform badly when it comes to gender diversity. Kenya is the “best” performer in this regard, with 55 – 17.9 per cent – of Kenyan tech startups having at least one woman within their founding team, but this is hardly a claim to fame, as this figure should – and surely will soon be – much higher.
Beyond that, the figures make even grimmer reading. Only 75 – 15.6 per cent – of Nigerian tech startups have at least one woman within their founding team, while in South Africa the number is 70 (14.3 per cent) and in Egypt 70 (12.5%). Natural development will occur in this regard, but more needs to be done, especially from a funding perspective.
Access to acceleration, incubation
Kenyan startups have access to unparalleled levels of ecosystem support, with almost half the 481 companies tracked by our report having undergone some form of acceleration or incubation over the course of their lifespan.
This 45.5 per cent figure is only marginally better than Nigeria, however, where 217 companies – 45.1 per cent – have taken part in such programmes. In Egypt, 38.6 per cent of startups have been participants, while in South Africa the share is much lower, at 25.7 per cent.
Jobs created
Between the four of them, at the time these reports were released, these leading African startup ecosystems employed over 50,000 individuals between them. Nigeria leads the way, with startups from the country employing a combined total of 19,334 people. This represents an average headcount per startup of 40.
Lagging further back, 11,462 individuals are employed by Kenyan tech startups (37 per startup); 11,349 by South African ventures (23 per startup); and 12,913 by Egyptian companies (also 23 per venture).
Who is best-funded?
Last but by no means least, let’s take a look at funding. Nigeria is the most popular investment destination on the continent. Between 2015 and mid-August 2022, 383 tech startups raised a combined US$2,068,709,445 – a higher total than any other country. In second, 242 individual Kenyan startups secured investment between January 2015 and mid-November 2022. Those startups secured a combined US$1,281,918,200.
A total of 357 individual South African ventures raised a combined US$993,684,600 between January 2015 and April 2022, while US$791,072,500 was raised by 318 Egyptian tech startups across 447 individual rounds between January 2015 and September 2021.
The latter two, given their respective reports are by now nine and 14 months old respectively, have presumably caught up a little in the meantime, but for a true perspective on the current state of investment in the African startup space, make sure you download your free copy of the latest edition of the African Tech Startups Funding Report when it comes out in the next couple of weeks. In the meantime, grab your (also free) copy of last year’s edition here.
