African start-ups outperform this year

African start-ups outperform this year

Posted by P. Charitha on July 22nd 2017

 
According to the “Venture Finance in Africa 2017” report by VC4Africa ( Venture Capital for Africa), 71% African tech start-ups are generating revenue, while over 40 % have received outside funding.
VC4Africa (Venture Capital for Africa)a platform for start-up funding and a fast growing community of business professionals in 159 countries in the African continent.
The report, which is based on data collected from 591 start-ups in 48 African countries, as well as 111 Africa-focused investors, aims to aid a better understanding of the critical success factors for African ventures.
 
With 71 % of the surveyed start-ups generating revenue, VC4Africa said the data shows that African markets are full of opportunities. This statistic is a small increase from previous years when 70 % indicated they were generating revenue, while 23 % of the start-ups are generating more than US$50,000. “This number is lower compared to previous years, which might imply that more early-stage ventures are entering the ecosystem. Other macro-economical factors, such as devaluing local currencies, might also be reasons for the decrease in yearly revenue generated,” the report said.
Meanwhile, 42 % of the ventures in the dataset have received outside funding, with 52 per cent of these companies going on to raise more than US$50,000. The report finds most investments are secured by Nigeria-based ventures 90 investments, compared to 52 in 2016.
 
However, average investments are higher in South Africa by the fact that the South African start-up ecosystem is one of the most developed on the continent. Just over half of the start-ups surveyed employ staff, with companies that do so creating seven jobs on average, while the median staff count is 3.1.
 
VC4Africa said while many factors go into building a company, this year’s research analysis makes clear that a strong team of founders is the key driver of venture success in Africa.
65% of African tech start-ups have multiple founders, with 46 % of the companies including a female founder in their team. Exclusively female teams form 9% of the total ventures. 
“Entrepreneurs are a critical driver of innovation and development. There’s a growing consensus that the future of the African continent depends to a great extent on entrepreneur success and African entrepreneurs have the potential to build scalable companies,” the report said. (Content taken from Disrupt-Africa)
 

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