Funding in healthcare-focused technology companies in Nigeria and Africa is growing as investors seeking to diversify their portfolio investments inject more money into the sector.
A report by Briter Bridges, a platform that tracks investments across the tech ecosystem, showed that healthcare startups have raised $390 million across more than 30 deals in the first half of 2023. This is a significant increase compared to $40 million in the second half of 2022, and $125 million in the first half of 2022.
It is a marked improvement, according to experts, given that investors have typically bypassed healthtech companies for those in segments like fintech. But this time, the health sector has beaten other segments in terms of percentage increase over a period of three quarters. It would appear that investors are beginning to pay attention to a sector that is in dire need of funding in order to turn around the rot it grapples with. According to the World Health Organization (WHO), 72 million Africans or 48 percent of the continent’s population lack access to quality healthcare services.
Nigeria’s healthcare infrastructure is largely in a bad state and it lacks modern medical facilities. This is despite having one of the fastest-growing populations globally with 5.5 live births per woman and a population growth rate of 3.2 percent annually. The population is estimated to reach 400 million people by 2050, becoming the world’s third most populous country. Medical professionals are in short supply, with only about 35,000 doctors despite needing 237,000, according to WHO figures, partially due to the massive migration of healthcare workers overseas. Nigeria loses at least $2 billion every year to medical tourism, according to the Nigerian Medical Association. India accounts for more than half of this outflow.
Experts say this is behind the influx of founders building startups to fill the gaps in the sector.
“More people are coming to terms with the significance of healthcare and the role it plays in development for the continent,” said Ayomide Owoyemi, a health tech expert. “I also believe the COVID-19 pandemic brought it more to the fore. The other reason is that we are now having more health-tech-focused funds emerging.”
The role of healthtech companies in filling the gaps in the sector grew during the pandemic period. Due to the virus and the havoc it wreaked in the world and in some African countries, even government officials had to turn to innovators to build solutions to help people get access to quality healthcare. The pandemic encouraged the adoption of virtual healthcare solutions.
It was during this period that startups such as 54Gene, LifeBank and Helium Health became the platforms that created solutions that saved many lives. Their innovations also caught the attention of investors.
In May 2023, Africa: The Big Deal, a platform that tracks funding deals across Africa, reported that between January and April, healthtech companies were the only segment in the tech ecosystem that had seen positive growth year-on-year. Funding to the sector grew by 7 percent year-on-year, compared to fintech and energy startups, which saw a 19 percent and five percent decreases.
The largest funding tickets went to healthtech companies in Nigeria, Kenya and Egypt, including Helium Health (Nigeria, $30 million), MYDAWA (Kenya, $20 million), Yodawy (Egypt, $16 million), Remedial Health (Nigeria, $12 million), and Dawi Clinics (Egypt, $8 million).
Other startups that have raised funding so far include Berry Health (Ghana, $1.6 million), Quro Medical (South Africa, $1.3 million), DataPathology (Morocco, $1 million), Clafiya (Nigeria, $610,000), Akomah Health (Nigeria, $150,000), HealthDart (South Africa, $150,000), Talamus Health (Ghana, $150,000), and MDaaS Global (Nigeria, $150,000). There were also undisclosed investments in Zuri Health (Kenya), TIBU Health (Kenya), and Zoei Health (South Africa).
Emeka Ajene, CEO of Afridigest, a media platform that also tracks investment in tech companies, said a main driver of the investment is that some companies are getting more mature.
“Last year I think mPharma was the only post-Series A company in the sector, but this year we’ve seen Helium Health, Yodawy, MyDawa already. A good mix of companies that raised seed rounds plus in the past should be crossing into the next tier of growth,” Ajene said.
Specialised tech funds have also increased their activities in the healthtech segment. For example, Investing in Innovation, a pan-African initiative, had in May launched a second call for 30 healthcare startups that will be linked to international investors, offering systemic grants of $50,000 and benefitting from tailored investment readiness support.
“There is also the emerging concept of impact investment, which is driving attention to healthcare. Also, more funds are coming in the form of grants to push healthtech. Most of these were focused on the nontech segment of healthcare but as there are more interested in using technology to drive healthcare delivery, those are now being made open to health-tech,” said Owoyemi.
One of the companies that have benefitted from grants, Pharmarun (winner of a $10,000 equity-free prize at Pitch2Win 2023), told BusinessDay recently that it was seeking new funding to scale its operations.
“The fund we are currently raising, we are looking to use it to scale our product. Our goal is to acquire 1,000 pharmacists within the next six to 12 months amidst expanding our coverage areas,” said Teniola Adedeji, CEO of Pharmarun.
