In recent years, the amount of venture capital from local and international investors on the African scene has reached new highs. In 2015, African startups raised $400 million when compared to $4.7 billion raised in 2021.  The number of startups and investors in Africa is rising fast, which means that the competition for funding is becoming fiercer by the day.

There are a number of factors that make African startups attractive to investors. African startups are solving problems that affect basic needs that are common across the continent. They are using new technologies such as mobile, big data and artificial intelligence to tackle these problems in unique ways. This is unlike the developed world where new startups emerge to layer on existing solutions.

These companies are often focused on solving critical problems related to financial inclusion and innovation, and their success has the potential to create new opportunities and abundance for many people.

In addition to being innovative in their solutions, African startups are often bootstrapped by the founders, at the beginning. This means that they have a strong sense of urgency and commitment to succeed from the get-go.

While many traditional investment opportunities in Africa may offer low rates of return or require a long-term outlook, startups can potentially generate significant profits for investors.

However, these companies face several challenges in order to effectively scale, including recruiting skilled employees and gaining access to the right networks. Despite these challenges, many investors are optimistic about the future of African startups, recognizing the enormous potential for growth and development on the continent.

An example is the African fintech space which has seen tremendous and rapid growth over the past few years, fueled by high demand from consumers as well as a supportive regulatory environment. Africa has also seen innovation across sectors like health-tech, agri-tech, ed-tech, to mention a few.

In 2019, fintech was the leading sector in terms of African funding raised, accounting for 25% of the total, according to Partech. Agritech, logistics & mobility, off-grid tech and health tech sectors followed behind.

Investment across Africa has been consistent among The Big 4. With Nigeria taking the lead on investment as a top venture capital destination, followed closely by Kenya, Egypt and South Africa. Across these countries, a number of key hubs have emerged, such as Lagos and Nairobi in Nigeria and Kenya respectively, Cairo in Egypt, and Cape Town in South Africa. These hubs have become a  hotbed for innovation, as well as a breeding ground for the next generation of successful startups with the majority of startups in these countries emanating from these hubs.

Overall, with continued innovation, hard work, and dedication, these companies have the potential to become major players on the global stage and help transform Africa for the better. This is where Ajim Capital comes in! Ajim Capital is focused on investments in the African startup scene, and we have a proven track record of identifying promising startups that show potential for rapid growth.

If you're an investor interested in backing African startups, or a founder who has a great idea and wants to turn it into something amazing, we'd love to hear from you!

Interested in learning more? Visit our website to get in touch.