The year 2021 has proved exceptionally successful for African startups, drawing more record-breaking fundraising deals than all of 2019 and 2020 combined.
By early December, the continent had surpassed $4.6Bn in investment for 2021, nearly doubling the $2.4Bn raised in 2020, and the climb continues. Despite paving the way for other innovators, many of the countries where these startups are based, face increasing levels of youth un(der)employment. According to the International Labour Organization (ILO) in 2019, 12 million young Africans were unemployed and 65 million were working but living in poverty. These numbers will continue to only increase as every year, around 10 to 12 million African youth enter the labour market, yet only 3,1 million jobs are created as reported by the African Development Bank.
It is predicted by the WEF 2016 Future of Jobs report that 75% of the jobs of the future will be created by entrepreneurs and at VC4A, we strongly believe that these high-growth African startups are the key to driving the workforce of the future. Since 2016, VC4A has been a partner in the Work in Progress! Alliance, an alliance with the mission to combat high levels of youth unemployment across Africa, particularly in Nigeria, Egypt and Somaliland. The Work in Progress! Alliance is also a long term sponsor of the VC4A Venture Showcase since 2017, theexclusive program of choice for early-stage investors and hand-picked startups looking to raise their Seed ($500K-$1,5M) and Series A ($1,5M-$25M) rounds.
After hosting the first 6 editions of the VC4A Venture Showcase and XL Africa (2017) and L’Afrique Excelle (2019) programs with The World Bank, ambition arose to gain a deeper understanding of the impact of the program. VC4A took a closer look at all 78 alumni who participated between 2017 and 2020, to measure the overall growth of their companies and how this has contributed to their ability to create jobs for youth more specifically.
VC4A’s findings, combining the outcomes of desk research, surveys and interviews, showed that all 78 ventures attracted the interest of investors. Of this, 51 raised one or several investments, making a total of 75 unique investment rounds and $163,4M in funding amount, ranging from (pre-) seed to Series B. The total amount is likely higher as the exact fundraising amount of 13 of the 75 investment rounds were undisclosed. Subsequently, VC4A shared a survey with around 70 alumni ventures that were still in business, to which 38 ventures responded. Collectively, the respondents created 2960 new jobs at an average of 37 jobs created per year per startup. 87,5% of these newly created jobs are held by youth, and more specifically, 43% are held by young women.
From the interviews, VC4A learned that the concept of the Venture Showcase was highly valued by both the participating ventures and investors. As Pardon Makumbe, Managing Partner at CRE Venture Capital indicates:
No matter how networked you are, there is always an opportunity to meet new people and companies that are rowing in the same direction. The ecosystem needs the VC4A Venture Showcase and other players like that to create a sense of community on an ongoing basis.
From the side of the participating ventures, Rasha Rady, COO of Egyptian startup Chefaa, adds:
“For the VC4A Venture Showcase, the feedback from investors has strongly impacted our decisions on business strategy and on topics such as pricing and setting up an advisory board. The Showcase was a comfortable place to interact with investors, and learn what is needed to effectively engage with them.”
To learn more about the concept and access the full report on the research outcomes, visit the VC4A Venture Showcase page here.
A snapshot of the total amount raised by the participating companies:
The research for this report took place between September and October 2021. The total amount of investment raised as identified during the research stood at $163,4M at the time of writing but has already increased to over $200M in December 2021. Similarly, the number of jobs created is likely to be considerably higher as well. As SeamlessHR, one of the participating startups featured in this report, indicates: in just over a year, between late 2020 and late 2021, the company grew from 51 staff members to 116, and it is trying to fill another 50 open positions by the end of 2021.