A Closer Look at VCs’ Activities in Ghanaian Tech Startup Space in the Last 5 Years
Western African tech startups have continued to dominate the African tech startup funding landscape year after year. According to Big Deal data, regional startups raised more than $6 billion of the total funding raised by African tech startups since 2019. This translates to it attracting more investment than the combined Northern and Eastern African startups over the period.
Although Ghana is not one of Africa’s main four digital startup ecosystems (Nigeria, South Africa, Kenya, and Egypt), it has recently emerged as one of the continent’s most robust and established startup ecosystems, claiming the title of best of the rest in Africa, Venture Capital for Africa(VC4A). As one of Africa’s fastest-growing economies, with an annual growth rate of 6.5% and a GDP of $73 billion in 2021, it ranks eighth in Africa. With a population of 32 million people, 57% of whom are under the age of 24, Ghana has about 17 million internet users and the highest mobile penetration rate in Sub-Saharan Africa, at 130%. In Ghana, there are more mobile phones than people, with 15 million smartphone devices. It is a great location for tech entrepreneurs aiming to enter the enormous West African market.
The Ghana Startup Ecosystem is an emerging innovation cluster, rated 82 internationally, with a -1 point negative momentum since 2021. It also ranks third in Western Africa for startup potential, owing to the country’s huge consumer and business markets, sophisticated entrepreneurial skills, and robust corporate sector. Ghana has access to domestic finance and connections to a rising number of foreign investors. High-tech entrepreneurs thrive in an environment with an increasing number of startup support networks.
Ghanaian Tech Startup Funding in recent years
Notably, the region attracted a higher percentage of funding 37% ($1.8B) than its share of the continent’s population (30%) or GDP (27%), and a number of $100k+ deals (37% also) on the continent, having topped the charts in 2021, with 37% of deals and an even higher share of funding than (43%). Expectedly, Ghana put up a very strong performance in 2022 with 47 deals over $100k for a total of nearly $400 million (estimating PEG Africa’s acquisition by Bboxx at $200M), nearly 8x times more than in 2021; securing the nation a number 5 spot at a continent level in terms of funding raised in 2022. This was a massive leap from the bellow per performance that the space has consistently put up in the past 3 years, 2019- $21.2M, 2020 – $19.8M, and 2021 – $19.7M respectively.
It is worth noting that 60% of the nations on the World Bank’s list of the top ten fastest expanding economies in the world are on the African continent. Ghana was one of the world’s fastest-growing economies in 2019. With the aid of foreign direct investments and the creation the execution of policies such as the National Entrepreneurship and Innovation Plan, the country has built and nurtured one of the strongest startup ecosystems in Africa since 2013. These concrete actions have surely pushed Ghana’s ecosystem expansion to a more strategic level.
Despite Kumasi boasting of hosting quite a number of startups, Accra is not just the seat of power of the country but equally the tech startups’ headquarter, ranked at 296 globally.
The government, which has aggressively promoted startups through its Presidential Business Support Program since its inception in 2017, is one of the three key players impacting the startup scene. One of its main initiatives is the National Entrepreneurship and Innovation Program (NIEP), which offers incubators and grants to entrepreneurs and small enterprises. Each entrepreneur receives a loan ranging from $900 (5,000 Ghana cedis) to $9,000 (50,000 Ghana cedis) with a 10% annual interest rate to help them develop their business and generate additional employment. Within two years, this initiative had already helped 19,000 businesses and produced 90,000 employments.
In 2019, the government also established a $20 million startup fund. The startups and ecosystem builders, one of which is MEST Africa, are located in Accra, Ghana. Entrepreneurs get the skills they need to create their own software firms and compete in the global market.
According to the GSMA Ecosystem Accelerator, Ghana boasts about 25 hubs and accelerators that promote entrepreneurship and business growth. Meltwater Entrepreneurship School of Technology (MEST), iSpace, Impact Hub Accra, GiZ, Stanford SEED, Kosmos Innovation Centre, Ghana Tech Lab, and Hacklab Foundation are among the most successful. Unlike in most other nations, the startup environment in India is more decentralized. Cities with hubs include Kumasi (Kumasi Hive), Tamale (HoPin Academy), and Takoradi (HoNode).
Ghana has a significant pool of investors. Most of them provide seed funding to early-stage firms through grants, loan financing, and equity. The investor activity has been divided into two categories: Seed/Pre-seed (number of deals, value) and Series A+ (number of deals, Value).
The Accra Angels Network, which gives financial injections of $25,000-$250,000 from high net-worth people, is one of the most active investors, while Stanbic Bank offers no cap loans to eligible businesses with a 5-year payback restriction. Chanzo Capital is a large venture capital firm that provides funding ranging from $500,000 to $5,000,000 in Series A through C. Ingressive Capital is another VC firm active in Ghana, investing in seed to sustain tech startups with checks ranging from $100,000 to $200,000.
Other Notable Active VCs in the Ghanaian Tech Space Are:
Alta Global Ventures (Accra): Alta Global Ventures is a global venture capital fund supporting leading entrepreneurs from the top entrepreneur ecosystems around the world as they expand their business internationally. Alta Global invests directly in venture-stage and growth-stage technology companies that target high-growth markets. Through our global partner network, Alta Global also supports seed-stage companies in more than 20 countries and five continents around the world. (Source: Alta Global)
Apis Partners (UK-based): Apis Partners is a private equity asset manager focused on financial services in the growth markets of Africa and South Asia. (Source: Apis Partners)
CDC Group (UK-based): CDC Group plc is a development finance institution owned by the UK government. (Source: CDC Group)
coLABS Grey Matters Capital (US-based): coLABS is a sector-agnostic, global investment portfolio launched by Gray Matters Capital in early 2017 to invest in innovative and scalable enterprises that are tackling critical issues facing women and girls around the world. coLABS will be looking to make 6 new investments across the world every six months. The fund provides revenue-share investment capital between USD $50,000 – $250,000. (Source: coLABS)
Fidelity Bank Ghana (Accra): Fidelity Bank is a commercial bank in Ghana that was issued with its Universal Banking License on June 28, 2006, making it the 22nd bank to be licensed by the Bank of Ghana. (Source: Fidelity Bank Ghana)
Ghana Angel Investor Network (GAIN) (Accra): A network of Angel investors with a passion for investing in early-stage businesses with significant growth prospects and the potential to generate superior returns. (Source: Venture Capital Trust Fund)
Oasis Capital Ghana (Accra): Target clients typically have one or more of the following characteristics: require funding ranging from $500,000 and $5 million; SMEs with Sales less than $10 million or net worth excluding land and building of less than $1 million; employs not more than 100 people at the time of investment; small size, simple and informal structure with knowledgeable sponsors; organic growth opportunities; have market leadership potential or can become a first quartile player within the investment period. (Source: Oasis Capital)