NextBillion - An Initiative of the William Davidson Institute at the University of Michigan

Tuesday, April 16, 2019

By Oluwatosin Adeshokan

Funding has long been a challenge for African startups but the tide has started to turn in the last year as the sector heats up and both investors and entrepreneurs start to see some of their long term efforts come to fruition.

In the recent past the biggest issue startups from Lagos to Nairobi or Cape Town and Johannesburg would complain about was the lack of venture funding and the lack of options when it came to seeking funding. They’d look on forlornly as startups in admittedly much bigger markets like Silicon Valley or New York literally raised tens of millions of dollars in a Series A round.

One of the key challenges has been that much of the capital the drives global venture funding are in markets in the United States or London where the investors are used to deploying sums that were often too large for the early stage of development of the African startup sector. This ended up often meaning little capital was being deployed outside the scope of grants and a narrow slice of impact investing.

Photo courtesy of Leander Wattig.