Foreign investors continue to dominate investment activities in the Nigerian tech ecosystem accounting for 87.7 percent of a total of $293.23 million raised across 28 deals in the first half of 2021.
Data compiled by Techpoint Africa found that Nigerian investors contributed only 1.6 percent of the deal, and deals where local and foreign participated accounted for 10.7 percent.
Startups in the financial services industry known as Fintech in typical fashion as they have done in the last couple of years led the funding activities generating $271.61 million which represents a whopping 92.6 percent control of the total investment.
Beyond Nigeria, foreign investors have always dominated funding activities in nearly all the tech ecosystems on the African continent. For the past ten years, 81.3 percent of the total amount invested in startups in the West African region has come from foreign investors.
Techpoint Africa’s annual Nigerian Startup Report found that in 2020, startups in the country owe 71.2 percent of their investments to foreign funders. The investors accounted for $85.8 million out of the approximately $120.6 million that Nigerian startups raised throughout the year.
Read also: 8 Nigeria-based fintech companies attract $500m in 9 months
Despite the bad shape the economies of many countries on the continent are in, especially Nigeria, investors continue to see Africa as the next frontier for tech investments. Nigeria’s large population remains a strong premise for expecting return on investment and startups in the country are considered as well positioned to take their solutions to other parts of the continent.
Some of the investors this year have been in the African tech scene for almost as long as it has existed. Y Combinator, for instance, an early-stage accelerator and investor has invested in at least one Nigerian startup every year since 2014. Startups such as Paystack, Flutterwave, Tizeti, and Kuda are among the early-stage startups that got funding from Y Combinator.
The accelerator has completed 27 deals so far in 2021. Launched in March 2005, the Silicon Valley-based seed money accelerator organises a three-month-long accelerator programme twice every year for early-stage ventures around the globe. Startups that have received funding from Y Combinator include Payhippo, Prospa, Sendbox, Blueloop-Flux, Mono, Suplias, Mecho Tech, Infuiss Health, etc.
Nigeria has also seen an increase in first-time investors including Valar Ventures, Target Global, and Softbank. Valar Ventures and Target Global invested in Kuda Bank leading to the valuation of the fintech company pushing above $500 million. Softbank has also been very busy being responsible for OPay and Andela joining the unicorn league this year.
