BD Insider: Y Combinator has invested in 95 African startups, as of March 2022 — Report

In this letter, we covered Y Combinator's activities in Africa since 2009 and Nigeria telcos' proposal for a 40% tariff hike.

BD Insider: Y Combinator has invested in 95 African startups, as of March 2022 — Report

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In the debut Thursday edition of the BD Insider, we will cover:

  • What Y Combinator has been up to in Africa
  • Why Nigerian telcos operators are proposing a 40% tariff hike
  • African governments’ stance on cryptocurrency

Let’s dive in.

Y Combinator has invested in 95 African startups, as of March 2022 — Report

Even though YC launched in 2005, it did not engage startups outside the US and UK until 2008, when Canada’s A Thinking Ape participated in the YC Winter batch. In 2012, Y Combinator admitted Senegal’s Wave as the second African company to join the California-based accelerator.

Wave is the first African startup to join YC. After Wave, YC did not look to Africa until 2015 when another Senegalese startup, Oolu, and Kenya’s Saida participated in its summer batch. Since then, about 95 African startups have participated in the accelerator. In its recent batch, 24 out of 339 startups are from Africa.

Even when YC listed its 271 most valuable companies in the world, seven African startups—Flutterwave, Wave, Paystack, Reliance Health, 54gene, Yassir and Nomba—made the list.  

African countries will leapfrog countries — YC’s Managing Director

According to Michael Seibel, Managing Director and Group Partner at Y Combinator “YC has now funded 95 African companies, and we continue to be impressed with the talent and ingenuity of African founders. We believe that African startup founders will be a massive part of the continued development of the continent. I predict that many African countries will leapfrog countries in other parts of the world because they will be faster to adopt more modern software solutions in their economies.”

For me, this reflects tremendous growth, while I intend to do a comparison on the impact of YC and Techstars—the two prominent accelerators in Africa. However, I came across a report by Intelligence by Techpoint in partnership with Y Combinator that focuses on the activities of the accelerator in Africa since 2009.

In the debut of the BD Insider’s Thursday edition, I will share with you my takeaways from the report—some of them also formed part of the highlights curated by Intelligence by Techpoint:

  • YC has invested in 95 African startups
  • Nigeria has the largest share of YC-backed African startups, with 51 out of 95.
  • As of March 2022, YC-backed startups on the continent have raised $1.3 billion
  • 86% of the African startups that have participated in the accelerator were in the first two years of their establishment.
  • Out of the 95 African startups, only 19 have individually raised $10 million and above.
  • African YC-backed startups jointly have over 6,193 employees
  • Most YC-backed African companies were founded in 2020. Interestingly, only three got into the accelerator that year, while others made it into the Winter and Summer cohorts of 2021.
  • Most of the African startups that participated in the accelerator are fintech. It’s important to note that in over 15 years of backing startups, only 20% of the companies backed by Y Combinator have failed —an excellent number per industry standards.

Nigerian Telecom Operators proposes a 40% tariff hike for voice calls, SMS and data costs.

The Association of Licensed Telecom Operators of Nigeria (ALTON) has proposed a 40% upward review in voice calls, short message services (SMS) and data costs.ALTON said this in a letter addressed to the Nigerian Communications Commission (NCC), citing the rising cost of running a business.

According to ALTON, the proposed upward review of the price of calls will increase from N6.4 to N8.95, while the price cap of SMS will increase from N4 to N5.61.

“Upward review of the price determination for voice and data and SMS. Given the state of the economy and the circa 40 per cent increase in the cost of doing business, we wish to request an interim administrative review of the mobile (voice) termination rate for voice; administrative data floor price, and cost of SMS as reflected in extant instruments.” Head of Operations, ALTON, Mr. Gbolahan Awonuga disclosed.

In its letter to the NCC, ALTON stated that the telecommunication industry has been financially impacted following the nation’s economic recession in 2020 and the effect of the ongoing Ukraine/Russia crisis. The group said this had increased energy costs, increasing their operating expenses by 35 per cent. It added that the introduction of the recent excise duty of five per cent on telecom services had further increased the burden of multiple taxes and levies on the industry.

“In implementing the said recommendations, however, we recommend that the 40 per cent increase in the cost of doing business be factored in to arrive at a cost price per GB in view of the current economic situation,” ALTON stated.

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Editor's Note: Wave was the first African YC-backed startup, not PetaSales, this article has been updated to reflect this. (August 23, 2022)