The Next Five Billion-Dollar Startups in Africa
New contenders on the horizon and perspectives
Africa’s startup community has been steadily growing over the past 10 years. Between 2015 and 2020, the financial backing of African digital startups increased at a rate that was over six times faster than the global average. The Boston Consulting Group (BCG) recently published research on the growth and maturation of African tech startups that examines the phenomenon of technology startups and the venture capital ecosystem that turns concepts and startup enterprises into disruptive organizations. The authors contend that the continent’s young and expanding population, increasing internet usage, and adoption of cutting-edge technology with the potential to expand access to financial and healthcare services make it a favorable environment for tech entrepreneurs.
Number of startups that received funding over 2015–2020
Source: “Overcoming Africa’s Tech Startup Obstacles,” Boston Consulting Group, 2021.
Disrupt Africa claims that there are approximately 1000 companies in Africa. These firms raised US$701,460,565 in funding in 2020, a 42.7 percent increase from the US$491,623,400 raised in 2019. The story was very different seven years ago when African companies were only able to raise a total of US$185,785,500. In 2020, it was predicted that there would be 3,300 startups in Nigeria, the greatest number in all of Africa. After that, in the same year, South Africa and Kenya recorded roughly 660 and 600 starts, respectively. Rwanda, Ghana, Morocco, and Tunisia were additional important African markets for entrepreneurs.
Given the rapid expansion of this industry, it is not surprising that some African firms have become “unicorns.” Companies like Jumia, which was the first unicorn in the African startup ecosystem’s history and was valued at over $1 billion in 2016, Flutterwave, which is now worth over $3 billion, and Zipline, which is currently worth $1.2 billion, to name a few, have set the bar for many other upcoming startups on the continent.
The ability to predict unicorns is implausible. Anyone who works in the financial industry is aware that it will always be a game of luck. But data science academics are forcing the establishment to reevaluate long-held presumptions by quantifying what is and is not fortunate.
To this end, here’s our list of companies we think you should keep an eye on in the coming years;
Kuda Bank
In Nigeria, Kuda, also known as Kuda Bank and formerly Kudi Money, is a start-up digital-only bank with headquarters in London. 2019 saw a name change to Kuda Bank. Babs Ogundeyi and Musty Mustapha founded it.
Babs Ogundeyi and Musty Mustapha launched it in 2017.
Despite having a reputation for avoiding charging bank fees, Kuda Bank began charging 50 nairas for deposits of 10,000 nairas or more in July 2022. As a result of their support for the 2020 End SARS rallies, the bank received a lot of support from the protestors.
The bank also gave a million Naira to its millionth client. One of the seven African technology startups listed by the WEF for 2021 was this one.
The bank holds the Central Bank of Nigeria’s first license for a mobile-only bank in Nigeria (CBN). Currently, it has permission to offer mobile banking and microfinance services. In August 2021, it raised more than $55 million in Series B funding, valuing it at over $500 million.
The fast-expanding digital bank, valued at $500 million as of this year, undoubtedly has a promising future ahead of it.
Identitypass
Identitypass offers verification services to businesses all around Africa, giving them a safe, simple way to authenticate customers with numerous data entry points including the National Identity Number (NIN), driver’s license, account details, etc.
Identitypass provides a simple way to incorporate identity/user verification and even personalization into the legal business model that can be used by a company. Knowing exactly who uses a company’s services and how (companies have been sanctioned by the government over unverifiable identities of some users of their services and flimsy identification and verification policies) those services are being used are ongoing issues in Nigerian tech companies.
To expand its biometric identity verification service across Africa, Identitypass acquired $2.8 million in seed capital, which the business claims will help it achieve its objectives.
In addition to Y Combinator, Soma Capital, True Capital Fund, Sherwani Capital LP, and other funds, Marc Ventures Capital served as the round’s lead investor. The Nigerian startup has raised more than $3.1 million in total, when combined with the $360,000 it received in November 2021.
Palmpay
A firm called PalmPay offers a payment app. With its service, users may transfer money among pals and pay for airtime and bills. Every time someone uses PalmPay to make a purchase, they can receive incentives.
Palay is a mobile payments platform that was introduced in 2019 and provides a range of financial services. On the most fundamental level, it enables users to send and receive money into their PalmPay wallets or standard bank accounts using their smartphones. Users of PalmPay can conduct free peer-to-peer transactions while paying $10 for bank transfers.
In November 2019, the business raised $40 million in startup capital. Tecno, a division of Chinese phone manufacturer Transsion Holdings, took the lead in the round. In the round, two more Asian goliaths, MediaTek (Taiwan) and NetEase (China), also took part. PalmPay, like many other fintech businesses, aims to address issues with financial inclusion in the African market.
Mpharma
A business called mPharma collaborates with significant pharmaceutical producers, insurance providers, financial institutions, and governments to provide medicines directly to patients in these underserved markets. Doctors, patients, and pharmacists now have access to a network of high-quality chronic disease medications at affordable pricing because of mPharma’s portfolio of business solutions.
It is a healthcare organization focused on technology across all of Africa. Its goal is to provide drug accessibility for all patients at lower costs while maintaining and preserving quality in order to create a healthy Africa. It was established in 2013 and now serves more than 100,000 patients a month through a network of more than 300 pharmacies in important African markets. Millions of medications have been given to patients across Africa by its partner pharmacies.
James Finucane, Gregory Rockson, and Daniel Shoukimas launched the business in 2013. On May 25, 2020, Ghana’s mPharma raised an additional $17 million and added a former CVS executive to its board of directors. On March 28, 2019, mPharma raised more than $40 million in investment.
Eden
To increase its market share, Eden Life deliberately positioned itself as the go-to platform for home service needs and funded $1.4 million in a seed round.
The financing was headed by the British venture capital firm LocalGlobe. Samurai Incubate, Future Africa, Village Global, Rising Tide Africa, and Enza Capital, VC firms with an emphasis on Africa, took part.
In 2019, Eden Life was formed by Nadayar Enegesi, Prosper Otemuyiwa, and Silm Momoh. Customers can use a mobile application to arrange three home services through the platform: food, laundry, and cleaning.
Ex-Andelans, as they are known in the industry, launched the home service app two years ago, which caused some controversy. It was unexpected to see Enegesi and his co-founders choose to take on an area many people felt couldn’t be viable for a software firm in Nigeria at a time when founders were progressively launching ventures in fintech, e-commerce, and logistics.
According to Enegesi, the CEO of Eden Life, the company was established to aid people in improving their lives despite the challenging conditions in Lagos.
Remus Brett, a general partner at LocalGlobe, remarked on the investment and said that the firm was impressed by the startup’s dedication to customers, attention to detail, and position as a pioneer in the tech hospitality industry.
“LocalGlobe was enthralled by Eden Life’s idea for the future of home care in Africa. Due to this competitive edge and a core team with a track record of success, Eden Life is on an exciting growth path that will push African technology to new heights,” Brett said.
With the money obtained, Eden plans to spend it on internal technologies, hiring more employees, and producing food.
My Final Verdict
Of course, the aforementioned companies are not the only startups on the continent that are doing well; emerging startups like Fintech company Eversend, which deal in mobile payments, cryptocurrencies, and financial exchanges, and Ordera, the food delivery startup launched in the year 2019 that saw an unprecedented period of rapid growth during the pandemic, are paving the way for an expanding entrepreneurial culture. With the boom in supporting industries like Venture capital and foreign investment, it seems more and more like great things are on their way to Africa.
