South Africa is Africa's Startup Powerhouse, With The Highest Number of Exits

South Africa is Africa's Startup Powerhouse, With The Highest Number of Exits

According to the South African Startup Ecosystem Report 2022, which was published today by the SA SME Fund, Nedbank CIB, and startup-focused news and research organization Disrupt Africa, South Africa has become Africa’s startup powerhouse.

The 17th publication and second country-focused report of the South African Startup Ecosystem Study 2022 presented details of what startups are doing in the country, who is investing, and who is providing ecosystem support. It also contains the whole list of startups studied for the report.

Even if Egypt, Kenya, and Nigeria, the other “big four” members, compete for sponsored ventures or overall capital, South African startups are by far the most successful when it comes to successful exits. According to Disrupt Africa, 35 South African IT companies have been acquired since 2015, making up one-third of all acquisitions made on the continent in the previous 7.5 years.

The nation scored top in terms of acquisitions in 2019, 2020, and 2021, and it appears that it will do so once more in 2022. This is being driven more and more by fintech, with fintech firms being responsible for more than half of all South African startup exits over the past 18 months.

Africa's startup powerhouse
Gabriella Mulligan

According to Gabriella Mulligan, Disrupt Africa’s co-founder, South Africa has become one of Africa’s startup powerhouse. A feat it achieved from its significant startup ecosystems, making a name for itself by setting the bar for regional support structures.

“South Africa has established itself as one of Africa’s most important startup ecosystems, leading the way in M&A activity and the establishment of local support networks. This study illustrates that story, and it’s an excellent starting point for any entrepreneur or investor – or anyone else! – interested in getting engaged in the local startup environment,” said Gabriella.

Fintech Still the Driving Factor

South Africa is performing well in terms of funding. According to the research, 357 different South African digital firms raised a combined amount of $993,684,600 between January 2015 and May 2022, which was only surpassed by Nigeria during that time.

Funding has generally climbed year over year, especially in the previous three years, and 2022 is already on track to be a record year for South Africa in both categories. This is true both in terms of the number of starups financed and the overall amount secured.

According to the survey, 30% of companies in South Africa are involved in fintech, which is a major driver of activity in the startup sector. In fact, there are nearly three times as many financial startups in South Africa as there are in any other specific industry. Another important area is retail technology and e-commerce.

The South African Startup Ecosystem Report 2022 takes as its starting point a list of 490 South African tech startups for which enough data was available. A dismally low 14.3% of these startups notably have at least one female founder, indicating that diversity in the industry is still a problem, whereas more than 25% of the monitored companies have gone through an accelerator or incubator. They collectively employ almost 11,000 people.