By Conrad Onyango, bird story agency

Funding of Africa's health-tech startups is steadily increasing on the back of  investor interest in solutions that improve supply-chain bottlenecks.

According to The Big Deal, a database focused on startups funding in Africa, startups involved in health technology were the only African startup sector that saw an increase in fundraising between January and April 2023, after several years of rapid, across-the-board growth in African startup funding.

Funding into health tech startups recorded a 7% year-on-year growth, compared to drops in two of the continent's most funded sectors - fintech (which saw a 19% drop) and energy startups (a 5% drop).  

"Healthcare takes third spot (up from eighth position at the same time last year), being the only sector recording positive year-on-year growth, contrasting with the steep decline almost everywhere else," according to the Big Deal.

Latest data by Disrupt Africa shows funding of African tech startups in the first quarter of 2023 dropped by 57.2% to US$ 649 million, from US$1.5 billion in 2022.

Subsequently, the number of startups that have so far secured funding stood at 87 compared to 175 in the same period last year, highlighting the impact of the challenging global economic environment that has, since mid-2022, kept foreign investors away from long-term investment commitments.

However, the health-tech sector is showing signs of defying global shocks to accelerate a Covid pandemic-induced shift to virtual healthcare solutions.

The pan-African initiative, Investing In Innovation (i3) has launched a second call for 30 healthcare startups that will be linked to international investors, offered systemic grants of US$50,000 and benefitting from tailored investment readiness support.

The Bill Gates-backed initiative targets women-led startups founded or operating in francophone Africa that can leverage data to bring affordable, high-quality health products closer to patients.

"Local, data-driven innovators closest to delivery challenges can digitise supply chains in Africa to ensure they are resilient, agile, and responsive to the needs of patients," said Villgro Africa, incubator and impact investor on its website. 

In 2022, the initiative supported 30 startups to US$7M.

The Japanese investment firm AAIC has also made several investments this year, including setting up a subsidiary in Egypt to fund local startups and tap into Africa's growing pharma industry.

"We have also invested in four companies through our healthcare fund (as of March 2023), and we intend to continue to actively invest in the Egyptian market in light of its further potential," said the firm in a statement.

In March, AAIC invested in a digital banking platform, Credable Group, through the Africa Innovation and Healthcare Fund 'to strengthen local safety nets and medical systems in African and Middle Eastern regions by expanding access to financial services.'

In February, Egypt's health tech startup, Yodawy, secured a US$ 16 million Series B funding round to help expand its flagship e-prescription gateway touted as the first in the country. 

Less than two years after closing the Series A round, the startup has linked 20 leading health insurance firms, 3,000 pharmacies and over 300 corporate firms in Egypt through a national tech-powered infrastructure.

A similar development trend for 2022 can be seen in Kenya and Nigeria, where health startups are expanding distribution networks to bridge inequality in accessing medical products.

Salient Advisory's market intelligence report, Innovations in Digitizing Distribution of Health Products, showcases several entrepreneurs that have significantly expanded their distribution networks, affirming the growing investor interest in funding startups in this category.

"Investor interest in African health tech is growing and regulations are evolving rapidly," said the report.

Startups listed include Shelf Life, which grew its network by more than four-fold from 400 to 1,633 outlets in Kenya and Nigeria and Lifestores Healthcare, which increased from 85 to 600 outlets in Nigeria.

Maisha Meds more than doubled, from 400 to 900 registered outlets in Kenya and Nigeria, while mPharma, grew from 500 to 850 outlets in nine countries by June 2022.

"These innovators are working with community pharmacies and lower-end providers such as drug shops that are often poorly served by incumbent large-scale distributors and a myriad of wholesalers," said the Salient Advisory report authors. 

**bird story agency**