{"id":546788,"date":"2022-05-29T04:00:45","date_gmt":"2022-05-29T04:00:45","guid":{"rendered":"https:\/\/enterpriseam.com\/egypt\/whatsnext\/how-startupland-africa-is-coming-together-and-how-nigeria-was-able-to-pool-usd-1-8-bn-in-2021\/"},"modified":"2022-05-29T04:00:45","modified_gmt":"2022-05-29T04:00:45","slug":"how-startupland-africa-is-coming-together-and-how-nigeria-was-able-to-pool-usd-1-8-bn-in-2021","status":"publish","type":"whatsnext","link":"https:\/\/enterpriseam.com\/egypt\/whatsnext\/how-startupland-africa-is-coming-together-and-how-nigeria-was-able-to-pool-usd-1-8-bn-in-2021\/","title":{"rendered":"How StartupLand Africa is coming together \u2014 and how Nigeria was able to pool USD 1.8 bn in 2021"},"content":{"rendered":"

<\/a> How StartupLand Africa is coming together \u2014 and how Nigeria was able to pool <\/strong>USD 1.8 bn in 2021:<\/strong> Last week, we made our way<\/a> to Lagos, Nigeria, where we spent five days accompanying Egyptian entrepreneurship stakeholders on an exploration of the country that raised the largest amount of startup funding last year. In total, Nigerian startups raised a total of USD 1.8 bn in 2021, with the largest round coming in at USD 400 mn.<\/p>\n

We went on a quest to find out why Nigeria is so attractive to Africa-focused investors. <\/strong>Led by Cairo Angels Syndicate Fund (CASF) CEO Aly Shalakany, two Egyptian startups and one of CASF\u2019s portfolio companies from Kenya traveled to Lagos to explore the country\u2019s startup scene \u2014 and we tagged along to find out more about Nigeria\u2019s secret sauce. We gathered insights from one VC investor and two angel investors: Omobola Johnson<\/strong>, senior partner at VC firm TLcom Capital and former ICT minister of Nigeria; Biola Alabi<\/strong>, cofounder and GP of Atika Ventures and deputy chair to the Board of Governors of the Lagos Angel Network; and Tomi Davies<\/strong>, angel investor, our chaperone, and collaborator-in-chief of TVC Labs.<\/p>\n

And in case you\u2019ve missed some our travel logs this week, catch up on them here:<\/strong> Enterprise is visiting Planet Startup \u2014 in Nigeria<\/a> | Day one<\/a> | Day two<\/a> | Day three<\/a> | Goodbye, Lagos<\/a>.<\/p>\n

Before dive into Nigeria\u2019s record-breaking funding year, we need to set some context. <\/strong>From what we\u2019ve heard and seen over the past week, the narrative among investors is very continent-driven, as opposed to country-driven. Davies is one of the investors who has been actively working on building bridges through angel investment networks across Africa to push the continent forward \u2014 which was also what our trip was all about. And in general, stakeholders are keen to come together cross-borders and work on the continent\u2019s problems together.<\/p>\n

\u201cI\u2019ve been trying to build this bridge [between Egypt and Nigeria] for a while,\u201d Davies says.<\/strong> He has been in touch with Shalakany, managing partner of HIMangel Khaled Ismail, and chairman and cofounder of AlexAngels Tarek El Kady, to bring angel investors on the continent closer together. He\u2019s also been following the same concept with Nairobi in Kenya and South Africa. Johnson believes that the startup epicenters in Africa are Egypt, Nigeria, South Africa, and Kenya, based on the amount of investment that these countries have attracted.<\/p>\n

And we\u2019ve heard of quite a few pan-African investment firms and vehicles<\/strong>, such as TLcom Capital<\/a> and the Future Africa Collective<\/a>. Their main aim is to fund and support startups that solve problems affecting large populations across the continent.<\/p>\n

But the aim isn\u2019t only to pool more funding, but also extend these partnerships into themes. <\/strong>Davies wants to have angel investors come together on themes including smart cities, sustainable agriculture, and clean energy<\/strong>. \u201cThis year, I\u2019m working on creating three pan-African angel networks in those spaces,\u201d he tells us.<\/p>\n

Why these areas?<\/strong> Because these are spaces where Africa is behind, unlike fintech for example, which has been gaining enormous momentum, Davies says.<\/p>\n

So, how has Nigeria attracted all that funding in the past year? <\/strong><\/p>\n

#1- Size:<\/strong> Nigeria is a very populous country, which makes it attractive for investment, TLcom Capital\u2019s Johnson says. \u201cNigeria is a big market in terms of the market and size of the problems,\u201d she adds, saying it\u2019s a very compelling argument for being a VC in Nigeria.<\/p>\n

#2- The underbanked population:<\/strong> There is a large number of unbanked locals: About 36.6 mn adults are financially excluded, according to a survey conducted by sector development organization EFInA<\/a>. Fintech is exploding here, with some of our trip participants realizing that almost every second billboard is that of a fintech startup. But does that mean there are too many fintechs in the country? Not necessarily. Atika Ventures\u2019s Alabi believes that there are still a number of payment solutions that need to be built.<\/p>\n

#3- Very high mobile penetration:<\/strong> Nigeria has a mobile penetration of 82.4%, according to a frequently cited report by Datareportal<\/a>. \u201cAlmost 65% of our population is under the age of 35 \u2014 these are people that have never lived in a world without a mobile phone,\u201d Alabi tells us. People\u2019s first introduction to anything is mobile, she adds.<\/p>\n

#4- Bad infrastructure: <\/strong>As we\u2019ve briefly mentioned in our travel log<\/a>, Nigeria lacks basic infrastructure. There is a dearth of power infrastructure, Davies tells us, and that \u201cgives us an advantage.\u201d It opens up the doors to come up with real solutions to real problems, and pushes Nigerians to enter the green energy sphere \u2014 for instance \u2014 early on and find an alternative to the basic power distribution network.<\/p>\n

#5- Availability of capital. <\/strong>\u201cThere was a lot of [startup-dedicated] capital in the US that had nowhere to go, so [funds] decided to look towards Africa,\u201d Johnson tells us. Nigerians label themselves as a \u201cnation of entrepreneurs,\u201d which we\u2019ve heard from quite a few people. \u201cBuilding things is not foreign to us,\u201d Alabi tells us. Everyone has a side-hustle and everyone is aspirational, she adds. \u201cWe are inherently entrepreneurial,\u201d Davies says.<\/p>\n

NEXT WEEK- <\/strong>We\u2019ll be looking into how the Nigerian startup scene is expected to develop in the coming months (hello, down-rounds?<\/strong>), what challenges they face, and what Egyptian startups looking to expand into the country need to keep in mind before they do.<\/p>\n

\n

Your top stories on future trends for the week:<\/strong><\/p>\n