Africa boasts some of the most exciting markets for entrepreneurs. Countries like Nigeria, South Africa, Kenya, Ghana, and Uganda have incredible opportunities for people interested in founding a company. While a number of cities in the continent provide access to funding, business development support, incubators, and accelerators, the following three cities are among the most advantageous for aspiring entrepreneurs.
- Cape Town, South Africa
Cape Town has become a magnet for entrepreneurs in South Africa and other African nations, largely due to the city’s recent increases in funding availability and general atmosphere that is supportive of risk-taking. Over the last few years, many people have moved from Johannesburg, the most populous city in South Africa, to Cape Town to take advantage of the city’s available business opportunities, and an impressive number of people have left their day jobs to pursue entrepreneurship.
Because Cape Town contains the highest number of information technology companies in the entire continent, these decisions are not unfounded. Consequently, Cape Town has become a major hub for industry and is growing quickly. According to recent estimates, the annual growth rate of the city’s IT sector stands at 8.5 percent.
Angel investors are becoming increasingly popular in Cape Town. Through the organization AngelHub, a growing network of angel investors are pooling funding and providing coaching and other forms of support to aspiring entrepreneurs. Successful entrepreneurs who live in Cape Town have also been known to personally invest in ideas they find particularly impressive. In addition, the city boasts a number of venture capital firms also exist in the city, including Knife Capital, Intel Capital, Hasso Plattner Ventures Africa, and 4Di Capital.
Once companies advance past the initial startup stages, they can approach one of several private equity firms to secure the funding needed to grow their companies. These firms also provide great advice for making a middle-stage startup more profitable. Among the key private equity firms in Cape Town are Ethos Private Equity, Horizon Equity, Sanlam Private Equity, and Acorn Equity.
- Nairobi, Kenya
Over the last decade, the tech sector in Nairobi has grown dramatically. This has created new revenue streams and increased the number of innovative services available to entrepreneurs. As a result of this growth, which has resulted in annual revenues in excess of $360 million, Nairobi has earned the name “Silicon Savannah.”
Previously, few Kenyans could get online, and those that did had to rely on expensive satellite services. However, Kenya’s government recently installed four major Internet cables along the coast of Kenya, thereby assisting the growth of technology firms by increasing the number of Kenyans with access to the Internet. Today, 99 percent of the Internet in Kenya is accessible via cell phones, which more than 70 percent of the population owns. The prevalence of this technology has created a tech-savvy pool of potential employees.
The growth of technology may also have been spurred by the success of M-PESA, a mobile payment system that has become widely accepted by Kenyans. This system likely inspired and motivated would-be entrepreneurs to pursue their own revolutionary ideas.
At present, six different startup hubs exist in Nairobi, and more are expected to launch in the near future. Eventually, each hub will focus on a specific niche, serving as a great resource for entrepreneurs seeking support and assistance in that particular area. The hubs will likely become even more important as they attach to local incubators and organizations such as the Savannah Fund, which generates seed funding for Nairobi entrepreneurs.
- Lagos, Nigeria
The rise of several notable startups, including iRokoTV—“the Netflix of Africa,” has attracted a number of innovators to Lagos, turning the West African city into significant business magnet. The region’s startup hub is actually Yaba, a Lagos suburb that many refer to as Yabacon Valley. This area houses many of the banking and financial centers of Nigeria, as well as several notable institutions of higher learning. Nigeria has the second-largest growing economy in Africa, and this has spurred the emergence of a middle class eager to adopt new technologies.
Many angel investors and venture capitalists have begun paying attention to Lagos. This past July, the city became the first African host of StartupWeek, an event that celebrated small business owners and startups in Lagos over the course of five days. The scheduled activities included meetups to boost the growing startup culture, as well as panels and keynotes speakers that addressed relevant entrepreneurial questions. StartupWeek has taken place in 75 other cities around the world, and the decision to bring the event to Lagos before any other African city points to its rapidly growing economic potential.
Some other benefits of starting a business in Lagos include the presence of Angel Fair West Africa, which helps companies secure early-stage funding, and the arrival of new incubators and accelerators, such as 88Mph, which also has offices in Nairobi and Cape Town.