New Telegraph

February 24, 2024

Nigeria, others push global economic start-up to $3trn


A new report by Silicon Valley-based research, Startup Genome, has reported that Nigeria and others in the world have pushed up the value of the global economic start-up to over $3 trillion. Startup Genome, in its latest Global Startup Ecosystem Report (GSER), indicated that an increasing number of cities around the world had developed viable tech ecosystems pushing up the value of the global start-up. The report, which has tracked the growth of start-up ecosystems since 2012, ranks the top 30 global start-up ecosystems based on metrics such as performance, funding, connectedness and talent. According to the report, 85 ecosystems have now produced companies or exits valued at a billion dollars or more (compared with just four ecosystems in 2013).

The Asia-Pacific region has risen in prominence and now boasts 30 per cent of the world’s leading start-up eco-systems, compared with 20 per cent in 2012. Tokyo, Seoul, Shenzhen and Hangzhou all now boast robust research and development clusters, according to the GSER. Despite new ecosystems boosting the ranking, the top seven ecosystems are the same as last year. Silicon Valley has maintained top spot, followed by New York and London in joint second. (The UK capital topped the European tech city ranking in FDI’s and TNW’s recent collaboration). In the GSER, Beijing’s startup ecosystem came fourth, followed by Boston, and Tel Aviv- Jerusalem and Los Angeles in joint sixth. The seven leading ecosystems have ballooned to a collective value of $1.5 trillion – equivalent to 1.7 times the value of the remaining 23 ecosystems in the top 30 ranking.

However, the report said that venture capital investment in Africa had surged over the last six years, with firms investing a record $1.4 billion into African start-up last year (compared with $0.4 billion in 2014), while the number of deals reached a six-year high of 139.

The report showed that fintech and information technology were the leading start-up segments, both attracting 19 per cent of the 613 venture capital deals recorded in the six-year period, followed by consumer discretionary (18 per cent) and industrials (12 per cent).

Breakdown of the GSER’s report explained that financial services sector was the leading fund for greenfield foreign investors during the period, with 668 projects announced across the continent, according to greenfield investment monitor FDI markets. It stated that African entrepreneurs have had success raising early stage funding in other sectors, such as utilities, driven by investor interest in start-up developing green energy solutions. While venture firms globally have begun to show interest in African start-up, the GSER report found the majority of investors involved in the venture capital deals were USbased, accounting for 40 per cent of total investments. The next most active venture capital investors between 2014 and 2019 were based in South Africa (9 per cent), the UK (eight per cent) and Nigeria (four per cent).

Despite growth in the last few years, Africa lags behind other regions of the world. The continent accounted for a fraction of the $270 billion of global venture capital in 2019, according to PitchBook data. In addition to the top 30, the GSER include 10 runnerup and 100 emerging start-up ecosystems – the latter spread across 49 countries and valued at about $348 billion. On COVID-19, the report said that while the tech economy had been democratised in recent years, start-up was facing a dual challenge of capital shock and demand constraints

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