Africa start-up funding soars as innovation bug bites

The start-up ecosystem in Africa is experiencing a significant boom as an increasing number of investors are drawn to the continent, pouring billions of dollars into various sectors. Fintech start-ups, fueled by the rapid growth of mobile and internet penetration, are at the forefront of attracting funding. In a recent interview with CNBC Africa, Anne Lawi, Managing Director Africa at IMPACC, shed light on the trends and developments shaping the investment landscape in Africa. According to Lawi, the African start-up ecosystem has witnessed remarkable growth, with start-up funding surging from $2.1 billion in 2021 to $3.3 billion in 2022, marking a 55% increase. The number of deals closed across the ecosystem also rose from 564 in 2021 to 633 in 2022, reflecting a 12% increase. Additionally, the number of investors participating in funding activities increased by 28%, from 771 in 2021 to 987 in 2022. Lawi highlighted the positive impact of this influx of funding, noting that it has led to the creation of more jobs, the emergence of unicorns, and the growth of new businesses across various sectors. Fintech companies received a substantial portion of the funding, with $1.4 billion going into the sector. However, other sectors such as health, edutech, energy, and agritech have also seen a rise in start-ups, indicating the maturation of different industries across the continent. In addition to fintech, Lawi pointed out that investors are showing interest in sectors like e-commerce, logistics, edutech, health, and agritech. The impact of the COVID-19 pandemic has accelerated the growth of these sectors, particularly edutech, as the shift to online learning created a higher demand for educational technology solutions. Despite the positive developments, start-ups in Africa still face challenges, with funding gaps remaining a key issue. Many businesses struggle to secure the necessary capital to scale and expand their operations. Lawi emphasized the importance of providing early-stage funding to support start-ups and mitigate risks associated with growing a business model that can cross borders. IMPACC is actively involved in investing in early-stage businesses in Africa, with a focus on sectors like edu-tech, agriculture, and health. The company is committed to supporting businesses that address market challenges, have the potential to scale, and benefit the bottom of the pyramid. By providing capital and strategic support, IMPACC aims to catalyze the growth of these businesses and drive innovation across the continent. In conclusion, the surge in start-up funding in Africa, particularly in fintech and other emerging sectors, signals a promising future for innovation and entrepreneurship on the continent. By addressing funding gaps, fostering collaboration, and investing in impactful businesses, Africa is poised to become a hub for technological advancement and economic growth.