A review of recent funding reports reveals a trend of investors’ emphasis on industries with the best-perceived development and prominence prospects. In the last decade, eCommerce and financial services firms have dominated the funding room in West Africa.
Nigerian healthtech startups saw increased funding activity in 2020, according to Techpoint Africa’s Nigerian Startup Funding Report 2020, coming second to only banking and finance startups in terms of budget size and amount of deals made.
These startups raised $32.5 million in seven transactions during the period in question, 404 percent more than the total revealed record ($6.3 million) for 2019. In 2020, this contributed to 26.8% of all funding received by Nigerian startups.
This surge in investment coincided with the introduction of COVID-19 in Nigeria, and shareholders seemed to put a lot more money into health tech companies than they had previously.
According to several academic studies, Nigeria, Africa’s most populous nation, has a severe lack of quality healthcare facilities. According to the Universal Health Coverage (UHC) functional coverage index, the country only offers adequate critical healthcare services to 38.3 percent of its population.
According to the Financing Global Health Database 2019, the Nigerian government invested just $11 million on health in 2017, with $60 million in out-of-pocket spending.
After all, there have been promising signals, such as when Nigeria’s Minister of Health, Dr. Osagie Ehanire, announced the Nigerian health industry blueprint in December 2020, where he claimed to address the existing gap, secondary and tertiary healthcare, among other items.
Putting some pertinent questions aside, Nigeria did not do badly with COVID-19, but its health sector needs significant reform.
Thankfully, companies such as 54gene, Helium Health, Flying Physicians, and Life Bank have made significant progress toward COVID-19 and the growth of Nigeria’s health infrastructure and research and development.
Online retail Increases by almost 5900%
Online shopping businesses experienced a revival in 2020, with support increasing by 5,892 percent. As shown in a Techpoint Africa report, this will account for 11.6 percent of all revenue generated by Nigerian tech startups in 2020.
Online retail startups have raised the majority of money amongst West African startups over the last ten years. Well before fintech firms became investment darlings in 2017, this industry dominated funding headlines.
Sadly, most of these eCommerce startups had failed in recent years, and the sector’s funding has become volatile.
Dealdey’s demise, Jumia’s challenges, and Gloo’s founders critical take all cast a pall over the market.
However, for online retail/eCommerce businesses, 2020 was a watershed year. The pandemic caused companies to move online, increasing their value.
Amazon’s market capitalization soared, and Jumia reclaimed its unicorn status. On New York Stock Exchange, the Africa-focused eCommerce business is now valued at $4.5 billion.
Including logistics and financial services much more robust than they were a few years ago, it’ll be interesting to see how much eCommerce progresses in the coming year.
Story on the continental stage is different
Fintech companies led funding rounds in Africa, which is unsurprising. However, health tech companies are giving way to cleantech and online shopping companies on the continent.
According to Briter Bridges, fintech companies received the lion’s share of overall funding in 2020, accounting for 31% ($407 million), cleantech came in second at 22% ($295 million), and health tech came in third with 9% ($117 million).
It’s worth noting that Briter Bridges’ approach has changed this year, and you can read more about it here.
Healthtech, on the other hand, is ranked second in Disrupt Africa’s African Tech Startup Funding Report 2020, with over $102.9 million raised in 2020, accounting for 14.7 percent of Africa’s total funding. This time, eCommerce finishes in 3rd spot with $87.7 million received, accounting for 12.5 percent of the overall budget.
