EdTech startups are on the rise in Africa despite attracting low investment funding over the years, a new report by the Africa Private Equity and Venture Capital Association has revealed.
In its annual report, titled “2022 AVCA Venture Capital in Africa Report”, the continental body says that EdTechs received less than 1% of total VC funding.
Despite the low funding, over 150 active EdTech startups exist across 25 African countries as of last year, a significant proportion of which are less than three years old, according to AVCA.
From platforms providing educational entertainment for children to developing school management software and founders leveraging chatbox platforms to enable cheaper, offline access to learning materials, EdTechs are showing promising signs of growth.
“2022 saw a proliferation of startups offering practical yet innovative solutions to facilitate learning for Africa’s youth raise funding,” the authors said.
The AVCA report shows that amongst tech-enabled startups in 2022, EdTechs secured 4% of deals, behind e-Commerce and FinTech startups, which managed 6% and 25% of deals, respectively,
“Notable EdTech deals that took place in 2022 include the US$8 million Series A in Tunisian startup GoMyCode led by AfricInvest and the US$6 million Series A in Kukua, a Kenyan educational entertainment company.”
According to Lucy Muthoni, a senior lecturer at Strathmore University and an EdTech enthusiast, EdTechs holds significant potential for growth.
She expects a “boom in online learning platforms, mobile learning, and gamification” once investors realize the subsector’s immense growth potential.
“Africa has the fastest-growing youth population meaning technology uptake will not be a problem,” Muthoni added.
AVCA’s report shows that 78% of VC deals from 2022 went to tech and technology-enabled companies. Tech funding has grown substantially since 2018, according to the report, when only 103 tech-related deals were struck, compared to 619 deals in 2022.
“Growth in tech adoption grows the demand for skills training such as coding, data science, and entrepreneurship,” Muthoni explained.
Already, investors are showing an increased interest in the sector, with the number of funded companies rising by 25% last year, from 28 in 2021 to 35 in 2022, according to the report.
The increment is contributed by, among others, a 10% surge in impact investments targeting access to quality education.
“Impact investments in EdTechs are being charged both locally and internationally…as they increase, they will draw more private sector investors,” explained Muthoni.
The first quarter of 2023 has already seen a buzz of activities strategic to EdTechs and signaling potential investment momentum gain.
Co-Creation Hub, one of Africa’s largest innovation hubs, in February, announced the launch of a US$15 million accelerator program targeting EdTechs in Nigeria and Kenya in February.
Dubbed ‘EdTech Fellowship Program,’ CcHub, will back and support 72 startups in this subsector, while The Mastercard Foundation and Injini have partnered to support 12 South African EdTech startups through the 2023 Mastercard Foundation EdTech Fellowship Programme.
The 12 EdTechs will benefit from grant funding that will aid the implementation of different programmes within their space. This initiative aims to improve educational programmes and foster innovation in the education sector.
In North Africa, Egyptian EdTech, almentor.net, revealed it had raised US$10 million in its pre-series C round funding in March.
The EdTech firm will use the funding to bolster educational solutions as it seeks to serve 10 million learners with learning solutions in the MENA region.
These developments signal a funding increase for educational technology solutions.
Muthoni also believes that improved infrastructure will support EdTech startups by easing the pressure on initial investment costs. Unreliable electricity supply, poor internet connectivity, and limited access to devices have in the past scared away funders, she explained. That is all changing.
“We will bridge the skills gap … shift away from the usual challenges in the sector such as limited access to traditional educational resources,” Muthoni said.
Market analysis firm iMarc estimates that Africa’s e-learning market was worth US$2.8 billion in 2022, with forecasts showing it will reach US$5.2 billion by 2028.
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