The African startup economy is growing faster than the global economy.
Last year, various African startups celebrated wins displayed in dollar signs. There was a slew of high-performing investment rounds which included uLesson ($15M), Metro Africa Xpress Inc. ($31M), and MFS Africa ($100M). We could certainly go on but those numbers are proof that African startups are growing at a rate we have not seen before.
According to a LinkedIn posting by Founders Factory Africa’s Accelerator Lead Nicole Dunn, it was said that African startups raised $1 million every two hours in 2021 with a total of $4.9 billion invested in African startups.
Now more than ever, investments are soaring in Africa. Here is why.
More Trust In Startups Globally
The global startup economy has already witnessed improving numbers dating back to 2018. According to a LinkedIn report, India welcomed eight unicorns in 2018 and already that number has climbed to 42. China housed 91 unicorns in 2016, after taking five years between 2010-2015 to score five. Latin America generated $14.8 billion and 17 unicorns in 2021.
As investors witness more startups globally reach billion-dollar status, it appears they were ready to turn their heads toward Africa. Prior, investors questioned the return on their investment and feared African startups would not have the potential to acquire the lucrative unicorn status.
“For a long time, investors were hesitant to put money into early-stage startups in Africa. Political and macroeconomic concerns acknowledged, there was no assurance that Africa could produce billion-dollar businesses, and that investors taking on early-stage risk would get their money out,” Dunn wrote via LinkedIn. “To believe in unicorns, most investors need to see unicorns. By the end of 2020, there were enough mega-deals to instill confidence that the venture capital model could work on the continent.”
African Founders Contributing To Bolstering Economy
Investors aren’t the only face leading Africa’s booming growth. African founders are also taking a leap of faith by stepping away from traditional job routes to pursue entrepreneurship. Furthermore, as founders gain experience and find their footing in the market, they are networking with seasoned industry professionals and operating as advisors or investors for startups to follow.