Most funded African startups run by people that studied in top US, UK universities – report

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A 2019 report looking at ‘The Rise of the African Tech Scene’ from 2015 to 2018 released by Orange Digital Ventures Africa on July 1 shows that African startups that collected the highest funding rounds in the past year were started by people that studied in top universities in either the United States of America (USA) or France or the United Kingdom (UK).

The report, which defines an African startup as that headquartered in Africa or having the continent as its primary market, considered startups that raised more than US$100,000 in 2018.

According to the report, 1 out of 5 African startup founders in the 2018 survey graduated from a tier-1 University, namely Harvard University, Stanford University, London School of Economics (LSE), University of Cambridge, INSEAD, Wharton School of the University of Pennsylvania, Massachusetts Institute of Technology (MIT) and University of Oxford.

Orange Digital Ventures Africa states that 66% of founders with (Venture Capital) VC-backed startups have studied in either the USA, France or UK.

The African tech startup ecosystem is also dominated by well-educated people, with 58% of the African startup founders holding at least a Master’s degree and 97% having at least a Bachelor’s degree.

Though the report doesn’t explain why startups with western-educated founders get a lot of VC backing, there are a few examples that could offer a basic explanation.

First, the report says that most of the VC-backed startups are founded by people with 5+ years of international experience. An immediate example to give here at home is that of Ham Serujongi who first worked with Facebook before joining Maijid Moujaled, a Ghanaian who had also worked with Yahoo, to start Chipper Cash.

They met while undergrad students at Grinnell College in Iowa, US.

And the founders don’t have to be only Africans. For instance, Andela, one of the most funded African-market targeting startups has non-African co-founders:  Jeremy Johnson (Princeton University) and Christina Sass (University of Georgia) and Ian Carnevale (University of Toronto).

Iyinoluwa Aboyeji, Nadayar Enegesi and Brice Nkengsa, the African co-founders went to the same university in North America.

There are many examples like these but what’s important to note is that studying from the West gives you an opportunity to learn from experienced tech entrepreneurs, connect with rich investors and work for well-established tech firms to get admirable experience.

As earlier stated, the report indicates most African VC-backed startups were founded by people with 5+ international experience. And 51% of these had got their experience working in the US, UK (21%), France (15%) and other countries follow.

People who had worked in Sales form 34%, engineering follows at 25%, then consulting (19), finance (6%), marketing (6%) and e-commerce (5%).

Highest number of women entrepreneurs

According to the report, Sub-Saharan Africa has the world’s highest rate of women entrepreneurs, with Uganda and Botswana having the highest numbers.

Additionally, 16% of VC-backed African startup founders are female and 28% of the startups that raised money in 2018 had at least one female executive.

Other key info

– VC-backed deals increased by more than a multiple of 4 between 2015 and 2018 and the deals closed increased by a multiple of 3 in the same period, beating other continents (US, Asia and Europe).

– However, in value of funds raised by startups, the US led with $131 billion, Asia ($93bn), Europe ($23bn) and Africa ($1.2bn). This was in 2018.

– But Africa showed a higher percentage increase in funding with 108%, followed by US (58), Asia (45) and Europe (5%).

– There was also 18% growth in the number of startups in Africa, according to the report.

– More than half of the funds raised were late-stage rounds. They were only 14 but they contributed $602 million, more than half of the funds collected: $1.2 billion.

– Early fundraisings (Series A and B) from 70 startups fetched while $482m.

– The report also shows that there are over 130+ investors in the African tech scene.

– There are 442 active tech hubs, with most of them coming from South Africa, Kenya, Nigeria, Egypt and Morocco. Nigeria, Ghana and Ivory Coast have seen the highest rise in the number of tech hubs.


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