Record-breaking $560m for African tech startups in 2017, says report

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(CNN) — African tech startups have had a bit of a moment in the past few years.

The continent's major urban centers -- like Nairobi, Lagos and Johannesburg -- have been abuzz with incubation hubs, tech entrepreneurs and developers creating, what they hope will be, the next big app.

The tech giants of Silicon Valley have taken notice. In 2016, Facebook founder Mark Zuckerberg announced $24 million investment in Andela, a company that trains developers in Africa. Facebook is also opening a community tech hub in Lagos this year.

According to new research from Partech Ventures, investment is flowing too.

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Their research found that $560 million in venture capital funding was invested in African startups.

That's an increase of 53% from $366,8 million in 2016. The total amount was achieved by 124 startups through 128 rounds of funding.

African entrepreneurs are using tech to tackle the continent's challenges and are attracting funding in the meantime.

The facts and figures

While $560 million may sound like a lot, it's far off the billions funneled into America's Silicon Valley. However, it is a significant increase on the $40 million reportedly invested in 2012, especially given the relative smaller size of African economies.

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"The growth of the ecosystem is driven by overall positive economic trends creating a reservoir of consumers, rapid adoption of smartphones and mobile broadband and a dynamic early stage startup scene support by hundreds of tech hubs," Cyril Collon, a general partner at Partech Ventures, told CNN

Collon said most investors hailed from the US and Europe, but there was a growing crop of local investors.

Online, mobile and financial inclusion services (meaning individuals and businesses having access to transactions, payments, credit, insurance etc) constitute 87% of funding.

South Africa, Kenya and Nigeria received the largest amounts of funding.

"Nigeria and South Africa are the largest economies of the continent. But the share of investment from these top 3 markets is still disproportionately large," Tidjane Dème, general partner at Partech Ventures, told CNN.

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Companies in Francophone Africa (Rwanda, Senegal, Morocco, Cameroon and Tunisia) appear to lag behind in terms of funding. That's more to do with the fact that those nations are smaller economies.

"The real point here is that a few markets have been attracting most of the investment and we all need to widen the scope because transformative innovation is really happening across the continent," Collon said.

The numbers Partech Ventures produced include only deals higher than $200,000 and below $100 million.

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Previously a survey by Disrupt Africa reported in 2017 African startups received $195 million -- significantly less than the amount stated by Partech Ventures.

That's largely because of a difference in approach. Partech Ventures' methodology includes African startups that have their primary market in Africa, even if their headquarters are based elsewhere.

Both figures show an increase in funding.

Overall it signifies continued positive growth of investment for the African tech scene.