2
3
4
5
6
7
8
DEMOGRAPHIC GROWTH
AND MARKET POTENTIAL
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Source: PopulationPyramid.net
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THE VENTURE
LANDSCAPE
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ability to further double down on strong performing companies at the Series A stage. However, the capacity of Africa-based funds to participate meaningfully in Series A rounds remains limited. Most local funds are not sufficiently capitalized to support startups through multiple growth stages, which may explain why only 29% of active investors on the continent were Africa-based.20 Deal size trends further reflect this, with nearly 45% of venture deals valued at $5 million or less, and 40% of those under $1 million. 21The tendency toward smaller deal sizes is typical in Africa’s startup ecosystem, often requiring the involvement of larger international investors as companies scale. This presents an opportunity for larger foreign-based seed funds, like MaC Venture Capital, to increase their ownership in strong-performing portfolio companies at the Series A.
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Section Two
GROWTH POTENTIAL, PROMISING SECTORS, AND CURRENT INVESTMENT OPPORTUNITIES IN AFRICA
Africa’s diverse economy presents a plethora of investment opportunities across various sectors yet to be fully embraced by consumers, small businesses, and enterprises. Key areas showing promising growth and innovation potential include Fintech, Healthtech, Digital Commerce, Information Services, and Media
and Advertising. The common thread weaving these sectors together is the fundamental need for access—be it to financial services, healthcare, or reliable information—which propels their growth and presents ripe opportunities for investment.
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TOP FIVE INVESTMENT SECTORS
1FINTECH
2HEALTHTECH
3DIGITAL COMMERCE
4INFORMATION SERVICES
5MEDIA, CONTENT, & ADVERTISING
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FINTECH
In just a few short years, the adage “every company will become a fintech” has proven remarkably accurate, particularly in Africa’s rapidly evolving market landscape.29 Sub-Saharan Africa is home to almost three-quarters of the world’s mobile money accounts.30 Telecom giants like MTN and M-Pesa are at the forefront of this transformation, leveraging their extensive networks to process billions in transactions. In 2023 alone, MTN’s MoMo platform facilitated transactions totaling an astounding $221.3 billion, while M-Pesa exceeded this with a transaction value of $337.8 billion. This convergence of telecommunications and financial technology highlights a significant trend: transforming telecom operators into key players in the fintech space, advancing financial inclusion and making financial services more accessible to the unbanked and underserved populations.
Spleet offers rental management solutions that address housing flexibility for a rapidly growing population.
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For small and medium-sized businesses (SMBs or SMEs), the integration of fintech not only facilitates immediate financial needs but also establishes a foundation for future adoption, thanks to the higher switching costs for startups integrating fintech services into their product offerings. At MaC, VC our enthusiasm is kindled not just by these immediate opportunities, but by the broader potential of companies that augment their core offerings with fintech capabilities. Our investments in Shekel Mobility and Spleet exemplify this. Shekel Mobility, a B2B marketplace for auto dealers in Africa, not only simplifies the buying, selling, and trading of vehicles in the continent’s $30 billion automotive sector but also enhances it with crucial financing options through partnerships with banks. This innovative approach has empowered auto dealers to expand their inventories significantly, tripling their sales. Spleet allows tenants to rent properties and pay monthly rent while also providing the option for landlords to receive the rent yearly through various financing options.
This approach of integrating fintech services into product offerings can be particularly potent given Africa’s current market conditions. There is significant
latent demand for credit on the continent. In Nigeria, EFInA data shows that only 1 in 10 borrowers obtain their loans from banking institutions, and conservative projections suggest that Nigeria’s consumer lending TAM is at least 30% greater than available market estimates for 2023.31,32 The pattern is similar in other major African countries, with credit access lagging global standards in Kenya (22%), Egypt (7%), and South Africa (18%), according to the World Bank Global Findex Survey.33 Furthermore, the recent rise in inflation has increased credit demand, while higher interest rates have simultaneously reduced access to it. Integrating fintech services into product offerings has dual benefits here: helping startups to mitigate the effect of higher inflation while also gradually building the credit data infrastructure necessary to unlock access to credit, which can, in turn, accelerate consumer spending growth in Africa.
MaC VC’s philosophy for investing in fintech focuses on backing companies led by founders with deep sector or domain expertise. We especially look to invest in companies that are able to facilitate a crucial financial service for enterprises, and have a competitive moat rooted in customer loyalty. Shekel and Spleet align with this approach, as both companies effectively address immediate financial needs while creating avenues for broader fintech adoption across various sectors.
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HEALTHTECH
Enhancing healthcare access remains a critical challenge across Africa, particularly in remote rural areas far removed from medical facilities. Despite the ambitious pledge of the Abuja Declaration in 2001, where African leaders committed to allocating at least 15% of their national budgets to healthcare to address prevalent diseases, by 2018, only two nations had achieved this goal.34 In fact, Nigeria, the birthplace of this commitment, allocated less than 6% of its 2023 budget to the sector. The shortfall here is compounded by a significant “brain drain” issue, with a staggering 65% of Egyptian doctors and numerous Ghanaian nurses pursuing careers abroad, often in higher-income countries like the UK. Currently, Africa’s healthcare workforce density stands at approximately two workers per 1,000 inhabitants, highlighting a dire need for innovative solutions.35, 36, 37
Healthtech startups in Africa are poised to bridge this gap by leveraging technology to expand healthcare access. Initiatives such as virtual-first primary care and proprietary health data management can significantly mitigate the continent’s healthcare delivery challenges. MaC VC portfolio companies, including Afya Rekod and Antara Health, exemplify this approach by building solutions to improve health outcomes.
Afya Rekod has pioneered a patient-centric approach with its decentralized, patient-owned electronic health records system. The platform not only allows individuals to upload and manage their health data in real-time but also facilitates access to healthcare services by making personal health information
Afya Rekod enables better patient care through a digital data platform.
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Antara Health offers holistic health & wellness solutions tailored to every life stage.
instantly actionable.
By ensuring that medical histories are complete and readily available, Afya Rekod empowers healthcare professionals to tailor treatment plans more effectively and enables public health officials to respond swiftly to acute health crises.
Antara Health is integrating AI-assisted health navigation, simplifying complex healthcare processes for patients and providers alike. This model offers a holistic care package, especially for those managing chronic conditions, encompassing health and financial protection, concierge care coordination, and the reassurance of having a dedicated advocate throughout their
healthcare journey.
Notably, Antara has achieved significant outcomes, with 81% of chronic hypertension patients having their blood pressure controlled, compared to just over 2% of Kenyans nationally. Additionally, 87% of diabetic patients under Antara’s care have their blood sugar controlled. Insurers have seen 36-47% savings on claim costs in the first year, and employers have realized a 2.5x ROI in avoided medical leave, based on wage savings per staff member.
The healthtech companies we invest in leverage health data in novel and highly efficient ways, empowering providers by enabling more efficient and effective care strategies and ultimately driving better health outcomes for the overall patient population across the continent.
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20
MEDIA , CONTENT,
AND ADVERTISING
Media and entertainment is a sector that has garnered notable attention, largely due to the global rise of Afrobeats, and the continued growth in African OTT (Over the Top) video streaming markets. As we mentioned earlier, Africa continues to have a rising youth population leading to the emergence of influential media brands and an increased focus on effectively allocating advertising budgets to reach this demographic. This trend has also fueled the growth of the creator economy, a relatively nascent industry across the continent, with Nigeria, Kenya, and South Africa dominating the scene. According to PwC, total Entertainment & Media industry revenue across these three markets reached $17.5 billion in 2022 and is projected to grow, reaching $27 billion by 2027. 49This growth is primarily driven by two factors: the rapid increase in mobile and internet access, enabling a new
generation of highly monetizable communication, and Africa’s growing youth population, leading to a strong demand for fresher, more engaging, and culturally relevant content. The gaming and esports sectors are also expected to see strong future growth, with mobile gaming driving increased data consumption in Nigeria. Additionally, music streaming adoption is rising across South Africa, Nigeria, and Kenya, with subscription revenue set to surpass R1 billion in South Africa by 2027. That said, our team remains bullish on technologies that not only reduce the time and cost of content creation, but also provide robust methods for creator monetization and personalized content discovery. With the rapid growth of digital platforms and the emergence of new brands tailored to African audiences, there is a growing need for innovative
advertising solutions that can help brands connect with consumers in meaningful ways. One approach is through gamifying user engagement on mobile platforms, granting brands access to data they wouldn’t otherwise receive. MaC VC portfolio company
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TakeBackTheMedia helps democratize entertainment
TakeBackTheMedia (TBTM) does exactly this by leveraging its AVOD (advertising-based video on demand) platform to drive financial gains and provide residual income for consumers who engage with content on TBTM’s mobile app or partner platforms. For example, if a user interacts enough within the platform, they’re able to win a variety of prizes through redeemable tokens called Kola. These prizes include mobile data packages, which are particularly valuable in Africa, where data costs are significantly higher than in other regions—the Alliance for Affordable Internet estimates that the median cost of 1GB of data as a share of monthly income is at least three times greater in Africa than in Asia.50 Through a partnership with one of the largest global credit card companies Kola tokens are also redeemable in the form of money/ credit. This model benefits both brands and consumers; brands gain a comprehensive understanding of the target community beyond simple demographic data, enabling targeted ad campaigns, while consumers earn rewards through their platform engagement.
In 2013, Jonathan Perelman of Buzzfeed famously stated, “Content is king, but distribution is queen and she wears the pants,” a sentiment particularly relevant
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in Africa today.51 Increased advertising opportunities will directly be correlated with the rapid rise of local African media. In some countries, many Africans today are still dependent on international media such as Yahoo, BBC or international streaming services such as Netflix or Disney+ or ShowMaX (owned by Multichoice Group, influenced by European and American conglomerates). Additionally, younger audiences are increasingly finding value in social media pages for their primary sources of media. These platforms, while not inherently African, use algorithms and data collection to optimize content delivery. A key player changing that dynamic is MaC VC portfolio company Big Cabal Media, a pan-African multimedia platform producing highly engaging lifestyle and professional content for Gen Z and millennials. Big Cabal Media’s network includes its flagship brand, TechCabal—an online publication analogous to the U.S.’s TechCrunch—as well as Buzzfeed-esque Zikoko. As there continues to be a massive demand for advertising via African content, media businesses that understand the local context will present a huge value driver for brands looking to establish a presence in the region.
Additionally, as content and distribution become more
localized, the ability to produce content becomes ever so important. Companies such as StarNewsMobile in Côte d’Ivoire and CREAM in Nigeria provide platforms for individuals to create, distribute, and monetize their own content, ranging from music to video. These platforms offer Africans an opportunity to generate additional income streams, reducing their dependency on platforms like YouTube or TikTok, which can hinder monetization due to inconsistent CPM rates across the African continent and limited payment options. 52 Additionally, these global platforms are not always optimized for mobile devices with low data capabilities, alienating a significant number of users
To support local creators and achieve an estimated $17B in market size by 2030, major telecom companies will need to continue improving digital infrastructure particularly related to connectivity and broadband access.53 Growth in local content creation offers the promise of a virtuous cycle: the industry offers job opportunities to Africa’s rapidly expanding youth population, who can then tap into export markets, earning valuable foreign exchange to stabilize domestic economies and boost consumer spending power.
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Section Three
CHALLENGES
1REGULATORY
2CURRENCY DEVALUATION
3CULTURAL AND REGIONAL BARRIERS
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REGULATORY
The narrative around Africa as an investment frontier is often clouded by a spectrum of challenges. These impediments, ranging from political instability and inconsistent regulatory frameworks to infrastructural gaps, currency volatility, and varied cultural landscapes, have tempered investor enthusiasm. Additionally, the complex and often inconsistent compliance requirements across different countries pose significant hurdles for businesses trying to operate seamlessly across the continent. Still, it’s crucial to discern that the essence of emerging markets lies in their inherent resilience and adaptability. Despite these obstacles, African startups have demonstrated remarkable ingenuity, showing that many of these perceived long-term issues are actually transitional challenges that can be overcome through time, learning, and innovation
One of the most common barriers to investment in Africa is the variation in regulatory environments across its nations, each shaped by unique economic and political contexts. Innovation often precedes regulation, leading to a gap that stems from insufficient collaboration or alignment between innovators and regulatory bodies. This phenomenon is not exclusive to Africa; in the U.S., for instance, the rapid evolution of cryptocurrency frequently outpaces regulatory frameworks. A case in point is the economic impact of internet shutdowns in Sub-Saharan Africa. In 2023, governments in the region orchestrated internet blackouts totaling 30,785 hours, affecting approximately 84.8 million users and resulting in nearly $2B in economic losses. These shutdowns, often instigated by governments during controversial elections
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- Lagos’s Motorcycle Ban: In Lagos, Africa’s most populous city, a 2022 ban on motorcycles dealt a heavy blow to the informal sector. This regulation has forced a considerable number of startups to either cease operations or drastically pivot their business models, disrupting the ecosystem and livelihoods dependent on this mode of transportation.
- Kenya’s Minimum Tax Regulation: In 2021 Kenya introduced a tax policy requiring all businesses to pay a minimum tax of 1% of their gross turnover, regardless of their profitability. This broad tax policy has disproportionately affected startups, particularly those in their early stages or struggling with growth challenges.
- Exchange Control and IP Regulations in South Africa: Stringent exchange controls and intellectual property (IP) regulations in South Africa complicate foreign investment processes and IP management for startups. These startups find themselves navigating a complex web of regulations, where actions related to IP and foreign investment necessitate conditional approvals from the South African Reserve Bank, hampering startups’ agility and growth potential.
to enforce censorship and maintain order, reveal the fragile balance between political stability and economic vitality. Senegal’s decision to disable mobile internet for six days is a poignant example. The shutdown cost the economy an estimated $8M per day—a significant toll considering the country’s 10.2 million internet users, who constitute 58% of the population. 54 Many local businesses, which depend on platforms like WhatsApp for transactions, faced significant disruptions. This situation has raised concerns about the reliability and openness of Senegal’s startup environment. Despite these obstacles, there’s been growing recognition and receptiveness to change and innovation among African governments. A milestone was achieved in 2018 when Tunisia enacted Africa’s first Startup Act—a groundbreaking piece of legislation designed to foster an environment conducive to innovation and entrepreneurship.55 Offering benefits such as eight-year tax breaks, first-year salaries for founders, a one-year leave policy for new company employees, and capital gains tax exemptions for investors, Tunisia’s initiative has inspired more than 20 African countries to either adopt or consider similar legislative frameworks. These measures are
30
empowering startups to contribute significantly to their economies, enhancing GDP growth across the continent.
Building on these developments, Rwanda, under President Paul Kagame’s leadership, has emerged as a leader in fostering technological innovation and supporting startups across East Africa. The country
has deployed a nationwide fiber optic network and established incubators like Norrsken Kigali House and 250 Startups. These initiatives, coupled with a new investment code, have made Rwanda attractive to foreign investors and facilitated collaborations with global corporations and academic institutions to craft innovation-friendly policies. Remarkably, the process
of starting a company in Rwanda has been streamlined to be cost-free and accomplishable within 24 hours. This wave of progress is not limited to Rwanda. Namibia, Sierra Leone, and Nigeria are witnessing the rise of a new class of progressive leaders dedicated to propelling their countries into the forefront of technological advancement.56,57,58 Through such leadership and policy reforms, Africa is gradually transforming its challenges into stepping stones for creating a robust, innovative, and sustainable startup ecosystem.
In parallel with these governmental efforts, startups are actively addressing regulatory and compliance challenges across various African markets. For example, Nigerian-based Startbutton is helping businesses manage compliance in multiple countries by acting as a “merchant of record.” Co-founded by Mallick Bolakale and Kelechi Obi in 2022, Startbutton enables companies to accept payments in local currencies and meet regulatory requirements without the need for establishing local offices. This is critical for companies seeking to expand across Africa, as it streamlines operations and mitigates risks related to currency fluctuations and compliance.
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CURRENCY
DEVALUATION
Rising inflation and currency volatility present substantial challenges across numerous countries, largely stemming from political instability, the prolonged impact of the COVID-19 pandemic, and dwindling foreign investment. In the four major African nations where startup activity is most vibrant (Nigeria, Kenya, Egypt, and South Africa), the economic strain has been palpable. According to data provided
by Stears, on average, these countries lost 25% of their currency value when compared against the dollar, with the Nigerian naira depreciating by 50%. Both consumers and businesses are grappling with escalating living costs and diminishing purchasing power, compelling them to cut expenditures on goods or technologies essential for enhancing their quality of life. Consequently, startups, often expected by investors to scale rapidly, have encountered difficulties in expanding their revenue bases—a key factor for securing later-stage investment.
Amid the economic challenges, recent policy actions to begin long-awaited economic reforms are a silver lining. After significant pushback against the 2024 Finance Act, the Kenyan government is working with the International Monetary Fund and other multilateral agencies to review its fiscal plans, with the aim of
providing the government with the necessary fiscal muscle to prop up the economy.59 Meanwhile, Nigeria’s year-old government has enacted a wave of reforms on foreign exchange, petrol subsidies, and the banking sector, hoping to create a more enabling business environment and attract long-term investment. In South Africa, after a period of uncertainty following the presidential elections, cautious optimism trails the formation of a coalition government. 60 A common pattern emerges across the continent: unsteady steps toward reforms that ought to stabilize African currencies, improve living standards, and support business growth in the medium to long-term.
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Despite the overall withdrawal of international investors, African startups that have secured foreign capital in USD are in a stronger position. They benefit from extended financial runways, allowing them to continue product development and prepare for market opportunities when economic stability returns. The access to capital also allows them to explore new international markets, opening up additional revenue streams. Ultimately this period has seen a shift back to core business fundamentals, with a heightened emphasis on achieving cash flow positivity. From an investment perspective, the devaluation of currencies has unveiled more cost-effective opportunities, drawing investor interest. This dynamic has played a significant role in the surge to $1.2 billion in debt financing for startups in 2023, as equity financing becomes increasingly challenging to secure—a trend highlighted by Partech.
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With its 54 countries, over 3,000 ethnic groups, and more than 2,000 languages and dialects, Africa’s cultural diversity is unparalleled. While this can be a source of strength and innovation, it introduces complex challenges for startups looking to scale across the continent. The journey from a local entity to a regional powerhouse is fraught with hurdles: a Ghanaian enterprise branching into Francophone Africa, or an Egyptian firm eyeing expansion in SubSaharan markets, must navigate through a labyrinth of linguistic, cultural, and regulatory barriers. The commonly held VC maxim that a product’s inherent excellence can drive growth—a cornerstone of the product-led growth philosophy—faces significant
challenges in this context.61 Language discrepancies can render a product irrelevant, while user experience preferences, such as design aesthetics and color schemes, may stall adoption. On top of that, startups must contend with varying regulations from country to country and work to build trust within new communities. Despite this, African startups continue to exemplify resilience, and strategic ingenuity. Jumia, dubbed the “Amazon of Africa,” overcame initial infrastructural constraints to dominate the e-commerce space across ten countries. By establishing a proprietary logistics network and customizing its service offerings—such
as localized payment solutions and culturally resonant marketing campaigns like Mobile Week—Jumia has managed to bridge the divide between diverse African markets, offering tailored product categories that mirror local consumer behaviors and preferences.62
Some expansions demand a more calculated and strategic method, as demonstrated by Paystack, the leading Nigerian fintech acquired by Stripe in 2020. Paystack was much slower in scaling beyond Nigeria and it faced initial challenges such as understanding diverse regulatory landscapes, navigating cultural nuances, and overcoming barriers to entry in new markets. For instance, during its expansion into South
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ENDNOTES
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