The Rise of the African Startup Ecosystem

Africa’s startup ecosystem is thriving and attracting global attention – what StartupBlink’s Marcos Withington, termed, “the rise of the African startup ecosystem”. This was during a recent Webinar titled, “Unpacking the African Startup Ecosystem,” hosted by Pinaco & Co in collaboration with the Youth Enterprise Revolving Fund – Eswatini.

“Africa’s startup ecosystems are rich with potential and resilience. While challenges remain, the continent’s strengths offer a powerful foundation for growth. However, Africa is not a monolith – each country’s ecosystem presents unique opportunities and hurdles. By understanding these nuances and tailoring strategies accordingly, we can ensure that African startups not only survive but thrive on the global stage,” Marcos said.

The moderator, phiwa shongwe, introduced Pinaco & Co as a consulting firm that connects startups to investors, with a primary focus on building the underdeveloped Eswatini startup ecosystem. She highlighted P&C’s flagship project – a startup marketplace, developed by Atomic Computing through a grant by Amazon through the AWS Activate program, which aims to match investable startups with investors.

African Startup Ecosystem Overview

Marcos presented an in-depth exploration of the African startup ecosystem, discussing key sectors driving growth, funding, innovation ecosystem as well as the role of tech hubs, government policies, and international partnerships. He explained that StartupBlink maps and analyzes startup ecosystems worldwide, in particular the top 100 countries and top 1000 cities. He acknowledged the synergy between Pinaco & Co’s mission of “discovering and presenting to the the world Eswatini’s first unicorn,” and StartupBlink’s mission.

Nokuphila Sibandze, introduced the Youth Enterprise Revolving Fund as a government entity established in 2009 to support and promote youth entrepreneurship in Eswatini. “The fund aims to provide financial resources to young entrepreneurs to start and expand businesses, create jobs, and stimulate economic activity,” she said. She highlighted key challenges faced by Eswatini youth – prevalent across the African continent. These include limited access to finance and business development support services, high competition from larger firms, limited technological adoption, and regulatory and political hurdles.

African Startup Ecosystem Rankings

Giving an overview of the African startup ecosystem, Marcos stated that StartupBlink’s 2024 Global Startup Ecosystem Index Report, ranks Lagos, Nigeria as the top African city with a vibrant ecosystem whilst South Africa tops all African countries (see slide below).

Building Strong Startup Ecosystems

In his presentation, Marcos stressed the need to build strong startup ecosystems across Africa. This entails fostering unity and collaboration among startups to make their voices heard and attract investment. In addition, building credibility through partnerships with hubs (such as iHUB Nairobi – Kenya, Co-creation HUB (CcHUB) in Nigeria and Kigali Innovation City in Rwanda) and presenting a unified front to potential investors. This drew attention to the need for marketplaces like the one Pinaco & Co is building.  “Entrepreneurs must develop digital products for a mobile-first market as a strategy to overcome the digital divide and increase access the larger population,” he said.

Funding Africa’s future

Although the decline in investment might seem concerning, it is part of a global trend affecting startups. Africa’s continued attraction of significant funding, especially in sectors like energy and healthtech, is a positive sign. This resilience and growing local investor participation indicate that Africa’s startup ecosystem is evolving towards sustainable growth.

The pie chat above shows that a significant majority (70%) of funding received by African startups in 2023 originated from international sources. This indicates a strong reliance on foreign investment.

Kenya emerges as the top recipient of funding, followed by Egypt, South Africa, and Nigeria. This suggests that these countries have established more mature startup ecosystems and possess huge investment opportunities.

It also shows that private investors account for 85% of all funding, while public sources contribute only 15%. This highlights the dominance of private capital in the African startup landscape.

The data shows significant growth and resilience of Africa’s startup ecosystem, demonstrated by the increase in funding received from 2021 to 2023. Furthemore, indicates that Africa’s startup ecosystem is attracting substantial global investment, despite a slight decline in 2023 (which is likely part of a broader global trend). The top three sectors for funding remain fintech, energy / cleantech, and healthtech, reflecting the growing focus on these areas.

In his concluding remarks, Pinaco & Co Senior Partner, Lwazi Ian Dlamini, emphasized the company’s commitment to develop the Eswatini entrepreneurial ecosystem, inspired by the 35th President of the United States, John F. Kennedy who once said, “ask not what your country can do for you, but what you can do for your country” and Strive Masiyiwa‘s mantra, “what is that in your hands?”. Pinaco & Co, is in discussion with StartupBlink to explore opportunities of conducting a health check of the Eswatini Startup Ecosystem, Eswatini startup ecosystem promotion, and the building of a database and portal to prepare the ecosystem for future Index publications.

Watch Webinar Recording – https://youtu.be/ZggNyIwcKt8

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About StartupBlink

StartupBlink is a global innovation economy research platform, that provides public sector ecosystem developers, corporate startup programs, multilateral organizations, and researchers with the knowledge and tools to map, brand, and accelerate innovation. The company’s global startup ecosystem map has hundreds of thousands of registered startups, co-working spaces, and accelerators creating a robust sample of innovation worldwide. Its annual reports and ranking tables are used by hundreds of thousands of readers to inform decisions on relocation, investment, and research.