Digest Africa Briefs: Most Funded Startups in Africa

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Ethiopia is one of the sleeping giants of Africa on the Technology scene. It has a population of about 110m and is the continent’s 7th biggest economy. Efforts are being made to build a tech ecosystem in the country. 

Most of these efforts are focused around universities which have been the major source of innovators in the country alongside the diaspora. The government has invested heavily in Science, Engineering, Technology and Mathematics (STEM) education. As a result, there is a steady stream of talented and technically adept graduates but many are not very knowledgeable about navigating the startup world. 

In 2011, Ethiopia’s first Hub, IceAddis, was born. It started off as a university initiative but spun off to be an independent venture. Since then, close to 10 other hubs have opened in Ethiopia including the privately owned X-Hub,Blue Moon and Icog Labs. The government also owns ICT hubs in the 4 major regional cities of Mekele, Bahir Dar, Dire Dawa and Adama as well as the national ICT Park in the Capital, Addis Ababa. These  provide support for the young entrepreneurs. 

However, Ethiopia faces a big problem of fast and reliable internet. The internet is provided by the state run Ethio Telecom. Power cuts are also frequent. Ethiopia ranked 159 out of 190 countries on the World Bank’s Ease of Doing Business Indicators 2019 Report. Its highest ranking was 104 in 2011. It has constraining legal frameworks around raising capital and business registration. 

The most active investors in the Ethiopia market by amount of money invested include; Finnfund, full name Finish Fund for Industrial Cooperation, which sunk $10m into Ethio Chicken; DEG, a German investment firm and the European Investment Bank which financed the $9.87m round into M-Birr. They are followed by Partech PartnersOrange Digital Ventures and Consonace Investment Managers that funded Gebeya  with $2m. DANIDA put $1m into Blue Moon and Oxfam Enterprise Development Programme and Novastar Ventures invested $1m into GreenPath Food. No single investor participated in a funding round with more than one startup. Most of the deals have been at seed stage (3), Series A (3) and Grants(3).This implies an ecosystem waiting to be discovered and ready for growth to tap into the 118m population and close to 20m internet users. 

Recent efforts to open up the economy including plans for entry into mobile telecom space by MTN and a consortium of Safaricom, Vodafone, Vodacom and Japan’s Sumitomo etc should create more opportunities for startups and entrepreneurs solving problems that rely on digital infrastructure rails provided by telecoms and mobile money layer.  The government is also revising a lot of laws and procedures and customs as a way of ease of doing business," Shide said.

However challenges still remain. The major challenges include taxes, scarce foreign exchange, license and business registration, poor infrastructure and lack of certainty, transparency and governance. For example, in July 2019, the government pledged to increase internet access at the Startup Ethiopia event at IceAddis. A few days later, it shut down internet nationwide for 3 days to stop students from cheating on national exams. 

Despite all this, a few startups have managed to raise money and grow. Using data from Digest Africa, we will list the 10 most funded startups in Ethiopia. They have raised $30.17m. EthioChicken, an operator of a chicken breaking farm and hatchery, holds the title of the most funded startup in Ethiopia with $10m raised so far which is 33% of the money raised by the top 10 funded startups in the country. The next two are a pair of fintechs; M-Birr($9.87m) and ArifPay($3.5m). The list also includes 3 other agritech startups, 2 drone design startups, an Edtech in Gebeya and one clean energy startup, HelloSolar. Here are the 10 of the most funded startups in Ethiopia. 

1. Ethio Chicken($10m)

Ethio Chicken is an operator of a chicken breeding farm and hatchery in Ethiopia. It was founded in 2010 by David Ellis, who was an American worker for a Non-Governmental Organization (NGO) in Uganda after realizing that multinational aid agencies would not drive economic transformation in Africa, but private businesses would. Ethio Chicken breeds day old chicks and sells them to agents who rear them for 45 days before selling to consumers. It raised a debt financing worth $10m in 2017 from the Finnfund

2.M-Birr ($9.87m) 

M-Birr is a fintech that facilitates mobile money services in Ethiopia. You can deposit and withdraw cash at an agent and transfer money by mobile top up. It is currently the leading provider of that service in terms of customers, distribution network and transaction volume. It had 1m customers by 2017. It raised a big $9.87m private equity round led by German investment firm DEG and the European Investment Bank on March 20, 2018.

3. ArifPay ($3.5m)

ArifPay is a Mobile Point of Sale(MPOS) system that allows ATM card holders to make electronic transactions on smartphones. It was launched in April this year by the team behind the ride hailing taxi app, ZayRide, after getting its license from the National Bank of Ethiopia. ArifPay raised a $3.5m seed round on March 19,2021 from 31 individual investors. 

4. Gebeya ($2m)

Headquartered in Addis Ababa, Gebeya is an EdTech and online software outsourcing marketplace. It has graduated over 600 tech talents of which a third have been matched with startups across Africa and the world. Gebeya launched in 2016 and raised a $2m seed round led by Partech Partners, Orange Digital Venturesand Consonance Investment Managers 

5. Livestock Trade Services ($1.2m)

Livestock is a company headquarters in the United Kingdom(UK) with operations in Ethiopia and Kenya. It focuses on providing integrated end to end processing and export of livestock in Africa. It had a $1.2m Series A in August 2018. 

6. Blue Moon ($1.1m)

BlueMoon discovers, incubates and invests seed funds in innovative and scalable youth agribusiness startups in Ethiopia. It has an incubator program, twice a year where 10 startups are selected into it for the next 4 months. In July 2018, the Danish International Development Agency(DANIDA) funded BlueMoon with a grant of $1.1m. 

7. HelloSolar ($1m)

HelloSolar is a pay-as-you-go solar energy provider in Ethiopia. It sells solar home systems (SHS) to offgrid areas and communities suffering from unreliable grid. It raised $1m in a Series A round in August 2018 from undisclosed investors. 

7. GreenPath Food($1m)

GreenPathFood is an agriculture focused social enterprise that connects small holder farmers in Ethiopia to restaurants, markets and other buyers in Ethiopia and abroad. The company has raised $1m in total which was a Series A round in June 2018. It was funded by Oxfam's Enterprise Development Programme and Novastar Ventures

9. Icog Labs ($200,000)

iCog Labs is a research and development company in Ethiopia. It partners with world leading Artificial Intelligence (AI) research groups to serve customers around the world. Founded in 2012 by Getnet Aseffa, it has raised a total of $200,000 in two grants; $100,000 in December 2018 and $100,000 in February 2018 from the US Embassy in Ethiopia. 

10. Maisha Technologies ($150,000)

Maisha Technologies is a drone design startup in Ethiopia that uses drones to deliver medical supplies to rural and remote areas. It received $150,000 in form of a grant in June 2020 from Villgro Kenya

10. Avion UAV ($150,000)

Avion Unmanned Aerial Vehicles (UAV) is a provider of  UAV Technologies and services. It was part of Y Combinator and received the standard $150,000 seed round from the program. 

 

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Digest Africa is a leading provider of data and insights on investment into African startups that investors, corporations, researchers, banks and startups can use to make meaningful decisions. We have a database encompassing; 

  • Over 1,400 venture capital deals for companies raising funding over the past 5 years
  • Over 3,000 startup company profiles
  • Over 400 investor profiles

 

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