Welcome to the first edition of Digest Africa Research Briefs. We shall be sending out at least one Research Brief a week, and the focus is on particular segments in Africa's tech ecosystem that need spotlighting. This week, we are taking an in-depth look at startups in Africa that have been admitted into Y Combinator, how they have faired and any other important notes to know about them.
Twenty-eight (28) startups in Africa have taken part in Y Combinator's accelerator. These have come from 9 countries and Nigeria - with 13 startups translating into 46.3% - has had the highest number. PetaSales from Ibadan, Nigeria. The startup took part in Y Combinator's Winter 2009 batch. Nala, a Tanzania-based financial services startup, is the latest entrant into Y Combinator after taking part in the Winter 2019 batch. Overall, the startups have raised at least $58.3 million in follow-on funding with Flutterwave raising the most amount. The financial services startup has raised at least $20 million in two different Series As. With 35.7% of the total admitted into the accelerator, the financial services sector is the most dominant.
Over the years
At 35.7%, which translated into ten startups, 2017 has the highest number of startups from Africa admitted into Y Combinator in a single year. Seven of the ten startups came from Nigeria; Aella Credit, BuyPower, Helium Health (formerly One Medical), RelianceHMO (formerly Kangpe), Kudi, Releaf and Tizeti. While the other three were; Trade (Ghana), Tress (Ghana) and WaystoCap (Ghana).
However, before that, there were a couple of African and Africa-focused startups to take part in the accelerator.
Contrary to the belief that Paystack was the first Nigerian startup to get into Y Combinator, The Y Combinator Database (YCDB) indicates that it is PetaSales from Ibadan. The online advertising startup was admitted into YC 10 years ago, though, according to YCDB, they have since then shut down their operations.
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Six years later, Afrostream (based in France but Africa-focused), Kenya's Saida and Dakar-based Oolu followed PetaSales. Like PetaSales, Afrostream also shut down in September 2017. Tonjé Bakang, the founder and CEO of Afrostream, chronicled the ups and downs that let to their shutting down. Both Saida and Oolu are still operational with the former not much in the limelight because they "like being under the radar" as one of the people familiar with them told Digest Africa.
In 2016, eight startups from Africa joined the accelerator. These included; Envyl (formerly Shypmate, Ghana), Flutterwave, Instabug (Egypt), Kuhustle (Kenya), Lynks (Egypt), OMG Digital (Ghana), Paystack (Nigeria) and WorldCover (Ghana).
In 2018, the number dropped to only 5 - half of 2017. The list of admitted startups saw three come from Nigeria; BuyCoins, Cowrywise and Kobo360, while the remainder all came from South Africa: Passerine Aircraft Corporation as well as Names & Faces. Nale, from Tanzania, is the first publicly known startup from Africa to take part in Y Combinator's 2019 batches though the number is likely to peak as the year goes on.
Most (8) of the (28) startups that have taken part in YC's program were founded in 2015. While PetaSales, founded in 2008, is the oldest on the list.
Of the 28 startups that have been admitted into Y Combinator from Africa, 13 are from Nigeria translating into 46.4% of the total. The other notable country with a significant number of startups accepted into the accelerator is Ghana with four translating into 17.9%.
In 2016, Y Combinator partners - Qasar Younis and Michael Seibel - visited Lagos for what would the first and only event the accelerator has organised on the continent. The duo's visit was aimed at drumming up applications to the accelerator from the continent, which can partly explain why the country has had the stronghold when it comes to admission into the accelerator.
Y Combinator Alumni also routinely organise meetups before applications into the next batch. These activities have primarily taken place in Nigeria and Ghana, with Paystack at the forefront of this with two meet-ups hosted so far - in 2017 and 2018.
If you're building a financial technology company, you're 3x more likely to get into Y Combinator than those working on products in other industries. According to the data, over a third of the companies admitted into Y Combinator from Africa are in the sector. These have also gone to raise the most significant sizes in follow-on funding. Flutterwave, the company with the highest follow-on funding at $20 million as well as Paystack - which has raised over $11 million in follow-on funding - are both in the fintech sector.
Y Combinator admits startups twice a year in two batches; Winter and Summer. Most startups in Africa usually get into the Winter batch.
According to YCDB, of the 28 startups, only two are dead - Afrostream and PetaSales. However, Ghana's Tress - who took part in the Winter 2017 batch - also seems to have shut down. The startup's website is no longer active. It also last posted on Instagram - a channel it widely used - on May 5, 2018.
Most startups that take part in accelerators - not just YC- are looking to raise follow-on funding after the seed. We therefore only considered follow-on funding as Series A onwards - with any financing in the form of grants/non-equity assistance or seed from other accelerators not included.
Combined, the 2018 startups have raised a total of at least $58.3 million in follow-on funding. Flutterwave, with over $20 million in follow-on funding is the most funded on the list followed by Paystack which has raised above $11 million. The other notable ones on the list include; Kobo360 ($7.2M), Tizeti ($5.1M) and Oolu ($3.2M).
[caption id="attachment_9034" align="aligncenter" width="600"] Flutterwave has raised the most follow-on funding[/caption]
The figure could have been higher. However, some companies never disclosed their follow-on funding. Some of the startups that raised follow-on funding but never unveiled include; Afrostream (Orange Digital Ventures), BuyCoins (Precursor Ventures) and Aella Credit (Y Combinator & 500 Startups). While Oolu also never disclosed the Series B that they raised from GAIA Impact fund in July 2018.
Under this section, we look at who is backing Y Combinator alumni in Africa. Some of the notable names that have backed more than one startup or participated in more than one round involving YC startups in Africa include; Y Combinator, Soma Capital (OMG Digital, WaystoCap), Lynett Capital (Waystocap, Tizeti), Social Capital (OMG Digital, Tizeti), Tencent Holdings (Paystack, Seed & Series A), as well as Plug and Play (WorldCover, Flutterwave).
Notes: Though not headquartered/incorporated in Africa, WorldCover and Afrostream were included because they had Africa as their primary markets. You can also read our methodology to understand more about our research basis.