$2bn valuation makes Lagos startup ecosystem first in Africa

A new survey has disclosed that Lagos start-up ecosystem is valued $2 billion making it the most valuable ecosystem in Africa and only second in number of start-ups after Cape Town. Cape Town has the largest ecosystem on the continent, with between 700-1,200 tech start-ups.

The survey which includes a ranking of the countries, Global Startup Ecosystem Report and Ranking 2017 was released by Startup Genome in partnership with the Global Entrepreneurship Network (GEN). It relied on responses from entrepreneurs and data on start-ups.

“The ranking is primarily driven by one question: in which ecosystems does an early-stage startup have the best chance of building a global success? Consequently it zeroes in on external factors that directly influence startup performance. The strength of the global ranking is the use of the performance model to validate every metric. Necessarily, the rankings capture only a fraction of the Startup Genome’s ecosystem assessment framework,” The report noted.

In the report, Startup Genome pointed out that although the Lagos ecosystem falls among the weaker performing ecosystems to date, investors are encouraged by low cost engineering talent with anglo linguistic capabilities.

A breakdown of the valuation showed that Lagos start-ups output is between 400 and 700. Growth is expected is projected at 6.6%.

Lagos also has the 9th highest rate of founders globally with an undergraduate degree at 59% while 93% of them have a technical background, the third highest rate in the world.

Start-ups in Lagos have one of the lowest rates of foreign customers at 6% with overall average at 23%, suggesting challenges to go global. Only 11% of start-ups have plans to expand globally, the report said.

The number of women founders at 14% on average is only 2% shy of global average at 16%. Cape Town however has 25%.

Alexandra Novltske, principal investment officer, Africa, Singularity Investments stated that with without an urgent need to expand geographically, Lagos already have a large, ready customer base. According to him, the key for Lagos is sustained discussion with foreign investors, the Nigerian-returnees with experiences from global tech companies and the adoption of Lagos as a key market of focus by some of the world’s best incubators.

“The Lagos startup ecosystem has shown tremendous growth in the last 12 months with our start-ups like Flutterwave and Paystack amongst many others getting into prestigious accelerators like Y Combinators and raising funds from top tier international investors,” said Yele Bademosi, general manager, Starta Africa.

Emeka Akano, co-founder and CEO of Jaro Mobile stated that entrepreneurs hold the key to addressing the high rate of unemployment affecting the African continent.

“These are interesting times for the fast-growing Lagos startup ecosystem. We are seeing great and innovative start-ups come through the system and local and international investors providing seed capital to scale the ventures. To be sure, there are still a lot of challenges facing the ecosystem but that is to be expected since the ecosystem is in its infancy,” said Collins Onuegbu, director at Lagos Angel Network (LAN).