Business Times Africa Magazine 2017 /vol 9/ No2 BT2Edition2017_web | Page 70

NIGERIA
Lagos is Africa's most valuable
startup ecosystem
L
agos has the most valuable startup
ecosystem in Africa, with the local
entrepreneurship scene worth US$2
billion, according to a new report.
The recently released Global Startup
Ecosystem Report and Ranking 2017,
produced by Startup Genome in collabo-
ration with the Global Entrepreneurship
Network (GEN), was based on conver-
sations with entrepreneurs and data on
startups.
No African country made the top 20,
but Lagos, Cape Town and Johannesburg
warranted mention in the report. At US$2
billion, the Lagos startup ecosystem is the
most valuable in Africa continent, but only
second after Cape Town in terms of the
number of startups.
The Lagos ecosystem has the ninth
highest rate of founders with an under-
graduate degree at 59%, while 93% of them
have a technical background, the third
highest rate in the world.
However, Lagos startups have one of
the lowest rates of foreign customers, sug-
gesting challenges to going global. Only
11% of startups plan to go global.
“While Nigeria is busy adding six mil-
lion new internet users every year, the
feverish entrepreneurial energy of Lagos
and its estimated 400-700 active startups
stayed consistent by providing them with
useful new technologies,” the report said.
“At the same time as the business mod-
68 Business Times Africa | 2017
els of local startups become more robust
and innovative over time, we also see
more of them also make headlines by re-
ceiving big checks from top Silicon Valley
VCs including Greycroft, Khosla Impact,
Green Visor, Social Capital Partnership,
and many others.”
Cape Town
Cape Town is the largest startup eco-
system on the African continent, with be-
tween 700 and 1,200 active tech startups in
the city. The whole ecosystem, however, is
valued at US$172 million, well below both
Lagos and Johannesburg.
One-third of Cape Town startup found-
ers have gained at least two years of prior
experience in a fast-growing startup, mak-
ing them five percent more experienced
than the global average. Yet Cape Town
startups have one of the lowest utilisation
rates of startup advisors in the world, with
only 0.85 advisors with equity per startup.
“Much of Cape Town’s talent comes to
the ‘Silicon Cape’ for its solid academic in-
stitutions and stays for its moderate living
expenses and friendly people,” the report
said.
“Cape Town is an emerging city that is
not yet plugged into the global ecosystem
and its fluid exchange of resources. How-
ever, above average startup experience,
low cost of engineering talent and rela-
tively solid funding factor in the regional
comparison are bright spots to build upon
during the next years to come.”
The ecosystem with the highest global
connectedness was Johannesburg, which
also has an ecosystem value of US$1.36
billion. The city has the third highest per-
centage of startups globally that experi-
enced positive corporate interest and in-
volvement, at 67%. The global average is
at 51%.
Meanwhile, 27% of startups reported
they are offering a product that is the first
of its kind globally. Only 10% of startups
immediately target the US or UK mar-
kets, far below the global average of 36%.
Johannesburg startups have 0.9 advisors
with equity, indicating a lack of support
systems for founder