Kenya has overtaken Nigeria as the most attractive destination on the continent for start-ups venture capital (VC) investment deals in 2020 despite the COVID-19 pandemic.
A recent venture capital data compilation by Startuplist Africa – a data-driven platform that focuses on African start-ups shows that Kenya accounted for 25percent of the total start-up investments in Africa in 2020, while Nigeria, Africa’s biggest economy accounted for 23percent of the total.
Kenya topped the list of venture capital investment deals with a total of $266million, followed by Nigeria with $237million investments for the period.
South Africa, Africa’s most industrialised economy came in third with $198million investment deals, followed by Egypt and Ghana with $125million and $90million respectively.
Kenya, Nigeria, South Africa, and Egypt remain emphatically Africa’s big four from a funding perspective, accounting for 77 percent of funded start-ups and 89.2 percent of total investment during the period.
The fin-tech sector was, yet again, the most attractive to investors in 2020, with more start-ups securing funding than any other sector and a combined total that exceeded others.
Nigeria’s start-up ecosystem has been gaining lots of momentum in recent years. Lumos, Flutterwave, InfraCredit, Accelerex, and 54Gene topped Nigeria’s most funded start-ups for the period.
“Nigeria and Kenya have been the leading destination of start-up investments in recent years. So, it is either Nigeria comes up top or Kenya,” said Femi Egbesola, national president, Association of Small Business Owners of Nigeria (ASBON).
“A lot of start-ups are coming up with amazing solutions, especially in the fintech sector. This is fast changing the entrepreneurial ecosystem in the country,” Egbesola said.
Similarly, Oo Nwoye, executive director, Tech Circle says that star-ups in Nigeria have created thousands of jobs and activities within the ecosystem and striving to consolidate the nation’s status as a top-notch international hub by attracting investors and stimulate entrepreneurship in the country.
Nwoye says that Nigeria is transitioning into a dynamic ecosystem offering start-ups a platform to potentially grow into million-dollar businesses.
“Last year, tech companies such as FlutterWave received huge funding from abroad to strengthen their mobile payment solutions,” he said.
Five-year data analysis of start-up investment in Africa’s entrepreneurship ecosystem shows that Nigeria has the most deals with a total of $1.74billion, followed by Kenya with $1.09billion.
Uche Aniche, the convener of StartupSouth, believes that the Nigerian ecosystem has transformed in recent years.
“Thanks to the wave of fresh young talents. Lots of start-ups and small businesses have taken off, creating a surge of co-working spaces and a collaborative spirit that is vital for the success of innovation hubs,” Aniche said.
He says investments in Nigerian companies have grown steadily over the past year, pointing to a relative improvement of the investment in the ecosystem and a huge amount of money available to invest in start-ups.
Nigerian start-ups have continued to scale amid the pandemic as many are now re-strategizing their business model to survive the economic fallout of the pandemic.