Are African Cities Featuring On The List of Top VC Investments Destination?

Cape Town

The United States has remained the forerunner when it comes to ventre capital investment, since its origins in Boston in the mid-1940s. VC investment remained almost an american thing, with over 50% of the invested VC money worldwide being captured by US firms. 

But that has been changing of late, with major VC investment destinations evolving from Asia, Europe, Middle East and South America.

Startups from these other destiantons are receiving increasing VC attention, as they receive more and more venture capital. 

The Center of American Entrepreneurship has concluded a recent report that shows the dminance of US VC and Startup activity coming under increasing challenge from other destinations around the world. 

The report lists the top 50 VC Investment destinations by:

  • Cities that received the most VC Capital investment
  • Cities driving overall global growth in venture investments
  • Cities that are increasing venture investments the most in percentage terms
  • Cities with the investments per Capita

For the report, the authors evaluated data on more than 100,000 deals closed in 60 countries between 2015 and 2017. 

The core results of the study:

US cities continue to top the list, but this time, challenged by major Asian and European cities, including Beijing (China) in third place, Shanghai (China) in 6th place, London (UK) on 8th place, on 9th is Hangzhou (China) with the 10th and 11th going to India (Bangalore and Delhi respectively). Berlin comes 12th. 

The Top 10 come from the US, UK, Germany, China and India. 

Going by the main findings, there has been:

  • a rise in global venture capital
  • a declining share of US share og global VC investment
  • the recent expansion of global venture capital investments has been driven by a relatively small number of places
  • the globalisaztion of startup and Venture Capital is geographically uneven

Thus, the most VC capital is attracted ba a handful of cities in the US, Asia, Europe. Looking at the report, Africa comes out as the "undiscovered" destination, with just 5 cities receiving VC capital:

  1. Cape Town (South Africa): Ranked 98 with 72 Deals
  2. Nairobi (Kenya): Ranked 114 with 55 deals
  3. Lagos (Nigeria): Ranked 152 with 39 deals
  4. Johannesburg (South Africa): Ranked 201 with 26 deals
  5. Cairo (Egypt): Ranked 219 with 21 deals
  6. Accra (Ghana): Ranked 231 with 19 deals

Despite the poor performance of African cities, there is still a reason to be optimistic. We have at least a city in Africa under the top 100. Nairobi and Lagos have been doing excellent in the last years. I would not be surprised, if these Africa cities all find their way to the top 100 an other cities attracting more VC investment.

But to get to there, African cities may need to better understand what has been preventing VC Investment from flowing in..

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