Nigeria’s economic hub, Lagos, has been named Africa’s leading startup ecosystem again. According to the 2022 Global Startup Ecosystem Report (GSER), Lagos was placed 65th among the top 100 emerging startup ecosystems worldwide.
Lagos and Cairo are the only African cities ranked among the top 100 emerging ecosystems worldwide. Cairo stands on the 73rd spot.
The report includes research data, surveys and interviews of over three million enterprises, nearly 300 ecosystems throughout the world, and survey data from over 10,000 startup CEOs around the world.
Also, Lagos rose 41 spots above to rank 81st on the StartupBlink 1000 Ecosystem Index Report 2022, placing it second in Africa and first in West Africa.
Emerging startup ecosystems
The emerging startup ecosystems are frequently ranked based on future potential and overall success. Performance, funding, market reach, talent, and experience were used to rank these startups.
The ecosystem value of the top 100 emerging ecosystems is over $1 trillion, a 96 per cent increase from the previous year. Europe with 37 emerging startups and North America with 36 startups continue to hold the lion’s share of the growing ecosystem. Africa, on the other side, has consistently had the least ecosystems among the top 100.
According to the survey, Detroit outperformed every other ecosystem on the list to take the top spot as the most emerging ecosystem.
Africa’s startup ecosystem ranking
Africa’s startup ecosystem has significantly expanded in recent years. And, with a total VC investment in Q1 standing at $1.1 billion, 2022 appears to be a significant record breaker for the region. Fintechs have also been the most successful sub-sector on the continent, notably in the startup space, spawning three unicorns.
Among the three unicorns, Lagos has the most with two.
Flutterwave raised $170 million in a Series C round at a valuation of $1 billion and is now the most valuable African startup at $3 billion, and OPay raised $400 million in a Series C round in August 2021, bringing its valuation to $2 billion.
The third unicorn is Dakar’s Wave Mobile Money.
The report also listed top performer cities in Africa including Lagos, Nairobi, Cape Town, Johannesburg, and Accra.
Lagos has the largest overall early-stage funding of $527 million for 2019 H2- 2021, and the ecosystem value for 2019 H2- 2021 at $9 billion, making it the top performing city in the region. Lagos is also ranked first in the African ecosystem in terms of performance and funding. In terms of skill and experience, it came in second in the African ecosystem.
The global startup ecosystem
The analysis identified ecosystems with a strong chance of becoming global top performers in the coming years, based on ecosystem value, unicorn status, and early-stage funding.
However, there has been a slight shift among the global ecosystems that held positions last year. In these categories, Asia has a greater number of startups. North America, Europe, and Latin America, on the other hand, were all represented with no representation from Africa.
The top five ecosystems in the Global Startup Ecosystem Ranking 2022 are the same as in 2020 and 2021. The top ecosystem in the world is Silicon Valley, followed by a tie for second place between New York City and London. Boston is ranked fourth, and Beijing is ranked fifth. Seoul, which was ranked 16th in the world in 2021, climbed into the top ten ecosystems for the first time.
When categorised by continent, North America continues to dominate the global ranking, accounting for 47% of the top 30 ecosystems, a decrease of 3% from the previous year. Asia is next with 30%, a 3% increase over the previous year, and a close catch up to North America, and has seen steady rise in its exit value.
Asia exits were over $423.5 billion in 2021, with a tremendous growth value of up to $531 billion this year.
Growth-oriented policies are the key to Africa’s future success
African governments have begun to focus more attention on startups, seeing potential for vast economic growth.
For instance, the Startup Bill in Nigeria, currently undergoing review at the National Assembly, with the goal of setting clear and deliberate policies to help promote the IT sector and consolidate the digital economy’s potential.
Kenya’s Startup Bill was established to provide a framework to encourage entrepreneurship in Kenya as well as stimulate growth and sustainable development of technology with a goal of attracting Kenyan talent and capital.
But, there is so much more left to be done in terms of partnerships with the private sector to upgrade investment tools, improve business environments and provide adequate support. Besides, Africa still lags far behind on a global scale.
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