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    Local vs. Global Buyers: The Dominant Exit Path for African Startups

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    Building a startup is a grueling endeavor, and a successful exit can be immensely gratifying. Just weeks ago, South African custom software firm Operativa realized this payoff when it was acquired by local strategic partner Peach Payments. While Peach Payments CEO and Co-Founder Rahul Jain termed the deal a “natural next step,” the reality for most African startups is far less rosy. While some have found success through mergers or IPOs, these paths are often fraught with challenges. The elusive nature of a profitable exit for many African startups remains a persistent issue.

    To shed light on this, we have analyzed over 100 African startup acquisitions with aims to identify patterns and answer critical questions: What is the typical exit path for African startups? And what other exit factors should African founders consider when building their businesses with exit in mind?

    1. Exit Timeline: Plan Early for Success

    The timeline to exit is a critical factor for any startup founder. The analysis reveals that most African startups tend to exit within a relatively short to medium timeframe:

    • 0–2 years: 24.8%
    • 3–5 years: 39.6%
    • 6–8 years: 13.9%
    • 9–11 years: 8.9%
    • 12+ years: 12.9%

    Insight: The majority of startups exit within the first 3 to 6 years. Founders should therefore prepare for an exit strategy early, focusing on building scalable models and pursuing rapid growth to capitalize on acquisition opportunities.

    2. Primary Sectors: Where Growth and Opportunities Flourish

    African startup acquisitions target a spectrum of industries, with notable concentrations in specific sectors:

    • Fintech: 20.79%
    • Ecommerce: 12.87%
    • AI/Tech: 10.89%
    • Healthtech: 2.97%
    • Mobility/Logistics: 6.93%

    Insight: Fintech and Ecommerce are particularly dynamic sectors with significant opportunities for growth and acquisition. Startups in these fields are well-positioned for success, while those in emerging sectors like AI and Healthtech may consider emphasizing on innovation and address niche market needs.

    3. Key Hubs: Leveraging Established Ecosystems

    Certain countries in Africa emerge as key hubs for startup acquisition activity:

    • Egypt: 27.72%
    • South Africa: 27.72%
    • Nigeria: 24.75%
    • Kenya: 11.88%

    Insight: Egypt, South Africa, and Nigeria are prominent centers for startup activity. Founders in these countries can benefit from established ecosystems and investor interest. 

    4. Domestic vs. International Acquisitions: Market Dynamics

    Acquisitions of African startups indicate insightful exit patterns, with a balanced split between local and international interests:

    • Domestic Acquisitions: 53.47%
    • International Acquisitions: 46.53%

    Insight: A majority of African startups are acquired domestically, indicating a robust local acquisition market. However, international acquisitions are also significant, reflecting global interest in African startups. Accordingly, African founders should aim for both local relevance and international appeal.

    5. Acquisition Values: Navigating Market Transparency

    Acquisition values for African startups often remain undisclosed:

    • Undisclosed: 71.29%
    • Disclosed: 28.71%

    Insight: While many acquisition amounts are undisclosed, notable high-value exits have occurred.

    6. High-Value Acquisitions

    Several startups have achieved significant acquisition values:

    • Paystack (Nigeria): Acquired by Stripe for over $200 million.
    • Sendwave (Kenya): Acquired by WorldRemit for $500 million.
    • InstaDeep (Tunisia): Acquired by BioNTech SE for $684 million.

    Insight: High-value exits are attainable, particularly in the fintech and AI sectors. 

    7. Sector-Specific Strategies: Tailoring Approaches for Success

    Different sectors exhibit distinct dynamics and opportunities:

    • Fintech: Significant portion of high-value acquisitions. 
    • Ecommerce: Consistent exits highlight market growth. 
    • AI/Tech: Increasing interest, particularly for unique tech solutions.

    Insight: Tailoring strategies to the specific needs and trends of each sector can enhance startup success. Addressing key pain points and leveraging emerging technologies will position startups for growth and acquisition.

    8. Strategic Partnerships: Building for Acquisition

    Most exits occur through acquisitions rather than IPOs:

    • IPO Exits: 2%
    • Acquisition by Larger Companies: 98%

    Insight: The majority of African startup exits are through acquisitions. African founders may therefore consider building startups with potential acquisitions in mind, focusing on scalability, innovation, and strategic fit with larger companies. Networking with potential acquirers and understanding their needs can significantly improve exit opportunities.

    Comparisons between Domestic v. International Exits

    • Financial Value: International acquisitions typically show higher average values compared to domestic exits. This trend reflects the larger capital resources of global investors and their strategic interest in African startups.
    • Strategic Preferences: Domestic acquisitions pf African startups usually focus on local market growth and consolidation. International acquisitions, on the other hand, are often motivated by the potential for global expansion, technological acquisition, and strategic market entry.

    The Bottom Line

    The African startup landscape offers significant potential for founders who can effectively navigate its complexities. By understanding typical exit timelines, focusing on key sectors, leveraging prominent hubs, and building for acquisition, founders can enhance their chances of success. High-value exits are achievable with a combination of innovation, scalability, and strategic partnerships, contributing to a thriving entrepreneurial ecosystem across Africa.

    S/NNAME OF STARTUPSECTOR OF STARTUPPRIMARY COUNTRY OF OPERATIONS
    YEAR FOUNDED
    YEAR ACQUIREDNUMBER OF YEARS BEFORE EXITNAME OF ACQUIROR/EXIT TYPEPRIMARY COUNTRY OF ACQUIROREXIT VALUE
    1Cars45Car-listing marketplaceNigeria20162017;2020; 20211Frontier Car Group; OLX Group; JIJIGermany; Netherlands; Nigeria (respectively)Undisclosed
    2UnderlieOpen BankingEgypt202120221Fintech GalaxyUAEUndisclosed
    3Lammae-Grocery and Q-commerceTunisia202120221AppetitoEgyptUndisclosed
    4ExitsM&A MarketplaceEgypt202220221PIEEgypt Undisclosed
    5GyftMobile Gift CardSouth Africa201220142FirstDataUnited StatesAcquired for $54m
    6FwRunEcommerceEgypt201920212DiggipacksSaudi ArabiaUndisclosed
    7SurebetBetting/GamingKenya201920212TransAtlantic CapitalUnited StatesUndisclosed
    8DelivroumFood deliveryTogo201820202GozemTogoUndisclosed
    9Shago PaymentsEcommerce payments solutionsNigeria201920212AlerzoNigeriaUndisclosed
    10Sa3arAuto tech (car assessment)Egypt201920212Contactcars.comEgyptUndisclosed
    11StabusMobilityGhana201920212Treepz (Formerly Plentywaka)NigeriaUndisclosed
    12DishaOne no-code tool for content creatorNigeria201920212InterswitchNigeriaDisha planned to shut down on December 31, 2021, save for the acquisition. Deal amount undisclosed. 
    13DoctorOnlineHealthtechEgypt202020222CheckMeEgyptUndisclosed
    14TalabeyahB2B EcommerceEgypt202020222MNT-HalanEgyptUndisclosed
    15Gallop ExpressLogisticsEgypt202020222GLT ExpressSaudi ArabiaUndisclosed
    16CircleProptechEgypt202020222MilangoEgyptUndisclosed
    17DigidukaFintechKenya201920213MarketForceKenyaUndisclosed
    18MangweeFintech (Mobile payments)Zambia201820213ZeepayGhanaUndisclosed
    19HarmonicaDating Egypt201720203Match GroupUnited StatesUndisclosed
    20Savi.ngFintech (Wealth management)Nigeria201820213PiggyVestNigeriaUndisclosed
    21AppositEnterprise (Software development)Ethiopia201720203PagaNigeriaUndisclosed
    22AmplifyFintechNigeria201620193OneFiNigeriaUndisclosed
    23QuickHelpAI (chatbot)Nigeria20152018 31001 Squared Artificial IntelligenceCanadaUndisclosed
    24TopCheckEcommerceNigeria201520183SilvertreeNigeriaUndisclosed
    25FundallFintechNigeria201920213Emerging Africa GroupNigeriaUndisclosed
    26FarmTrustBlockchain-enabled ecommerceTunisia201820213LAMMATunisiaUndisclosed
    27SwitchPayFintech providing alternative payments options to merchants and retailers. South Africa201820213AdumoSouth AfricaUndisclosed
    28Flo by SaadaEcommerceKenya201920223ElloeKenyaUndisclosed
    29FaturaB2B EcommerceEgypt201920223EFG Hermes HoldingEgyptUndisclosed
    30RadarHR And PayrollSouth Africa201920223FirepaySouth AfricaUndisclosed
    31PayJustNow‘Buy Now, Pay Later’ South Africa201920223Weaver FintechMauritiusUndisclosed
    32TareeqiBus trackingEgypt201820213eMushrifOmanUndisclosed
    33WooCommerceOpen source ecommerce pluginSouth Africa201120154WordPressUnited StatesAcquisition estimated to be worth over $30 million
    34WaystoCapB2B EcommerceMorocco201720214MaxABEgyptUndisclosed
    35PaystackFintech (Payments)Nigeria201620204StripeUnited StatesAcquired for over $200m
    36Bottles AppLogistics (on-demand Delivery)South Africa201620204Pick n PaySouth AfricaUndisclosed
    37StarterHubCommunityEgypt201520194RiseUpEgyptUndisclosed
    38Surf KenyaWi-fiKenya201520194BRCKKenyaUndisclosed
    39Source BeautyFashion EcommerceEgypt201820224ECC GroupEgyptUndisclosed
    40DilenyTechArtificial IntelligenceEgypt201820224Astute ImagingUSAUndisclosed
    41MowarridB2B MarketplaceEgypt201820224SarySaudi ArabiaUndisclosed
    42CrossfinCard and mobile-enabled payment transactionsSouth Africa201720214The EMMF I and ARC consortiumSouth Africa$94.3m
    43NimbulaEnterprise (Cloud computing)South Africa200820135OracleUnited StatesAcquired for $110 million
    44WayaWayaAI and Machine LearningKenya201620215AjuaKenyaUndisclosed
    45Cape NetworksSaaSSouth Africa201320185HPUnited StatesUndisclosed
    46QuenchEcommerce and last-mile delivery serviceSouth Africa201620215The Foschini GroupSouth AfricaUndisclosed. 
    47SWVLMobilityEgypt201720225IPO via SPAC (Nasdaq)USA
    48Sky.GardenEcommerceKenya201720225Lipa Later GroupKenyaBuy-out following bankruptcy
    49GiraffeRecruitmentSouth Africa201520216Harambee Youth Employment AcceleratorSouth AfricaUndisclosed
    50WizzPassVisitor ManagementSouth Africa201520216FM:SystemsUnited StatesUndisclosed
    51ConversioDigital MarketingSouth Africa201420206CM GroupUnited StatesUndisclosed
    52SendwaveFintech (Cross-border payments)Kenya201420206WorldRemitUnited KingdomAcquired for $500m
    53KongaEcommerceNigeria201220186ZinoxNigeria$10m (Reportedly)
    54ParkUppLocal Parking MarketplaceSouth Africa201620226Docklands VenturesSouth AfricaUndisclosed
    55Buni.tvEntertainmentKenya200920167Trace TvNigeriaUndisclosed
    56BaxiFintech (Digital agent network)Nigeria201420217MFS AfricaSouth AfricaUndisclosed
    57DevcorpEnterpriseMorocco201420217ABA Technology GroupMoroccoUndisclosed
    58PicupLogisticsSouth Africa201420217KaroooooSingaporeAcquired for $4.8m
    59CallPayFintechSouth Africa201420217UndisclosedUndisclosedAcquired at a valuation of ($6.8m)
    60DabaDoce-HealthMorocco201420217Orange MEA; AXA CIMAMoroccoUndisclosed
    61LunoBlockchainSouth Africa201320207Digital Currency Group (DCG)United StatesUndisclosed
    62OLX AfricaClassifiedsNigeria201220197JiJiNigeriaUndisclosed
    63FilkhedmaHomes servicesEgypt201420217SweepSouthEgyptUndisclosed
    64JUMIAEcommerceNigeria201220197IPO (Nasdaq)USA
    65AccounteerAccountingNigeria201520227FloatGhanaUndisclosed
    66ParceNinjaEcommerce logisticsSouth Africa201320218Imperial LogisticsSouth AfricaUndisclosed
    67MobisolOff-grid energyKenya201120198EngieKenyaUndisclosed
    68Tactful AIArtificial IntelligenceEgypt201620228DstnyBelgiumUndisclosed
    69UCOOKMeal Kit Delivery South Africa201420228Silvertree HoldingsSouth Africa$12.3M
    70iHubInnovation HubKenya201020199CcHubNigeriaUndisclosed
    71NafhamSocial startup for free crowdsourced educational contentEgypt201220219TyroEgyptUndisclosed
    72InstaDeepArtificial IntelligenceTunisia201420239BioNTech SEGermany$684M
    73GetSmarterEdtechSouth Africa20072017102UUnited StatesSold for $103-million plus $20-million in cash.
    74Kapa BiosystemsLife ScienceSouth Africa2006201610RocheSwitzerlandAcquired for for $445-million
    75eLimuEdtechKenya2010202010CcHubNigeriaUndisclosed
    76KngineAIEgypt2008201810Samsung ElectronicsSouth KoreaUndisclosed
    77Cheki (Nigeria, Uganda, Kenya)Auto techNigeria, Uganda, Kenya2010202111AutochekNigeriaUndisclosed
    78QuickCashFintechCôte d’ivoire2010202111E-SettlementNigeriaUndisclosed
    79MainOneData center infrastructureNigeria2010202111EquinixUnited States$320m
    80Retail CapitalFintech (SME Funder)South Africa2011202211TymeBankSouth AfricaUndisclosed
    81Fundamo CityFintech (Mobile financial services)South Africa1999201112VisaUnited StatesAcquired for $110 million
    82EventtusEvents managementEgypt2012202112BevyUnited StatesUndisclosed
    83Exchange4FreeFintech (Cross-border payments)South Africa2008202113AZA FinanceKenyaUndisclosed
    84DPO GroupEcommerceKenya2006202014Network International Holdings plcUnited Arab EmiratesUndisclosed
    85BeyonicFintech (Payments)Uganda2006202014MFS AfricaSouth AfricaUndisclosed
    86LawtrustIT securitySouth Africa2006202115AltronSouth AfricaAcquired for $17m
    87Ubusha TechnologiesIdentity Security SolutionsSouth Africa2003201916AltronSouth AfricaUndisclosed
    88Quirk (Mirum)Digital agencySouth Africa1999201617WPPLondon, United KingdomAcquired for a reported R350 million to R400-million ($35million to $39 million) at the time of the sale.
    89Genric InsuranceInsurtechSouth Africa2005202217Old MutualSouth AfricaUndisclosed
    90GumtreeOnline Classified AdsSouth Africa2005202217AdevintaNorwayUndisclosed
    91Okuhle MediaDigital mediaSouth Africa2003202118TraceFranceUndisclosed
    92orderTalkFoodtechSouth Africa1998201820Uber EatsUnited StatesUndisclosed
    93SPEEDB2B e-commerceEgypt1997202225X-ERAUAEUndisclosed
    94Scrim AppSocial PaymentNigeria202120232ChimoneyNigeriaUndisclosed
    95Local KnowledgeTravelTechSouth Africa201820235NeighbourgoodSouth Africa$1.5 million
    96QuicketTicketingSouth Africa2011202413TicketMasterUSAUndisclosed 
    97OperativaEnterprise South Africa202320241Peach Payments South AfricaUndisclosed
    98PolymorphEnterpriseSouth Africa200820241OctocoSouth AfricaUndisclosed
    99Cmiles CXEdtechEgypt202120243QuestionProUSAUndisclosed
    100KoolDeliveryTunisia202120243YassirAlgeriaUndisclosed
    101PowerhiveCleantechKenya2011202413Veteran CapitalUSAUndisclosed
    Based on publicly available data.

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