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Nigeria, Kenya, South Africa and Egypt consistently receive the largest share of funding for African start-ups. Known as the “Big 4” markets, the estimated 92% of total technology investment on the continent in 2021
The ‘Big 4’ markets have large populations and well-established regulatory systems, including many developers, incubators, accelerators and investors that enable the development of the continent’s strongest technological ecosystem.
Laws play an important role in strengthening these ecosystems and maintaining competitiveness. Egypt in 2021 introduce new laws Allows the central bank to allocate banking licenses to fintech and digital commerce companies as the country seeks to expand its digital economy.And in Kenya, a global mobile money pioneer, the government Courting fintech companies We offer tax and ownership incentives under the Nairobi International Finance Center (NIFC) to investors and investors worldwide.
Investors, especially those unfamiliar with Africa’s socio-economic landscape, simply view the ‘Big 4’ markets as safer bets. But innovation exists across the continent. Influential startups are everywhere from Senegal to Tanzania, Botswana, Ghana, Morocco and a few other countries, and opportunity-hungry savvy investors are looking beyond the ‘Big 4’. increase.
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💡 Opportunities: African tech funding is concentrated in just four markets, leaving room for investors to pursue insane opportunities
🤔 challenge: The technology ecosystem outside the “Big 4” markets is less developed than the major markets, leaving some gaps for investors and founders to fill.
🗺️ Roadmap: Building startups outside the ‘Big 4’ markets requires a holistic approach that also supports the growth of the larger ecosystem
People involved: Investors, Founders, Incubators, Accelerators, Governments, Regulators
92%: Share of total technology investment in Nigeria, Kenya, South Africa and Egypt in 2021
49%: Percentage of all African professional developers living in Nigeria, Kenya, South Africa and Egypt
$4.3 billion: Amount raised by African startups in 2021
1/3: Percentage of African technology incubators and accelerators located in Nigeria, South Africa, Kenya and Egypt
main office: San Francisco but focused on Africa
Head: Emmanuel Adegboye
Madica is an Africa-focused investment program launched this year by Flourish Ventures, a San Francisco-based venture funded by eBay founder Pierre Omidyar. While Flourish is fintech-focused, Madica is sector-agnostic and over the next three years he plans to support 25-30 African entrepreneurs with up to $200,000 each. Madica also provides additional support in the form of access to industry networks, mentorship and training. Madica he works closely with Afrilabs. Afrilabs is a network of nearly 400 tech hubs spread across his 52 countries in Africa, providing connections with local stakeholders, including community organizers and established start-ups.
Importantly, Madika is keen to invest outside of traditional tech hubs in Nigeria, South Africa, Kenya and Egypt, but will also target startups in those countries.
Emmanuel Adegboye, head of Madica, says that even in the “Big 4” markets, technology funding is concentrated in major cities such as Nairobi, Lagos, Cape Town, Johannesburg and Cairo, but in smaller towns and cities. Cities have more founders. Struggling to access funding and programmatic support.
Adegboye believes investors stay away from unfamiliar markets. If Madika can create enough success stories, more investors around the world will start thinking seriously about investing in the broader African tech landscape, beyond the biggest tech hubs.
“Global investors invest in what they know. It’s about going to these cities and getting stakeholders involved and understanding the context,” he told Quartz.
Madica features an open application process on its website, with three main eligibility requirements for interested founders. Have a minimum viable product (MVP), be engaged full-time, and have received little or no previous funding from the institution.
Madica also plans to promote inclusion in technology, considering factors such as local ownership and gender diversity of the startups it invests in.
“Last year, 93% of the money raised in Africa was from companies with male CEOs. There is no evidence that,” Adegboye said.
in a conversation with
🔬 About Madika’s focus on African early stage/pre-seed companies:
“Achieving product market fit requires a lot of work in the early stages, especially in markets where the ecosystem is less developed. Because we believe that if we can create enough success stories, global VCs will be able to see the situation.”
💸 About investing in new markets:
“We invest not just in cash, but in programmatic support, access to resources to get us on the right track. We have carefully considered getting involved.”
Other venture deals 👀
African Women Impact Fund (AWIF) In September, $60 millionAn initiative of the United Nations Economic Commission for Africa (UNECA) that aims to raise up to $1 billion over 10 years for women fund managers to invest in high-impact sectors and projects across Africa. .
Modusthe New York-based venture announced its expansion into Africa in November, $75 million Blockchain and AI focused fund for the continent.
Earlier this month, Mastercard announced $200 million Mastercard Foundation African Growth Fund (MFAGF)It aims to support the growth of early stage SMEs on the African continent and create employment opportunities for young people, especially women.
More from Quartz Africa
⚡ What Promoting Local Funding Means for African Startup Ambitions
💪 Big tech wins the battle for Kenyan talent
🖼️ Nairobi’s ‘Silicon Savannah’ Gets More Attractive
🏢 What African tech hubs have achieved in the last decade
Thank you for reading our member profile and supporting Quartz Africa to tell important stories of innovation across the continent.
—Martin Siele, Nairobi-based contributor
🤑 one thing
Fintech Sector Dominates 54% It is one of all the funds raised by African startups in 2021 and is responsible for many of the biggest deals of 2022.