Class of 2016: What surviving a decade actually requires

Ten years ago, one could easily count the African startups that raised venture capital in a single year. In 2016, 77 startups raised $367 million in venture funding, according to Partech. Nigeria, South Africa, and Kenya accounted for 79.4% of that funding. Financial inclusion attracted the largest share of capital at $206.3 million, or 56.2% of total funding, with fintech accounting for 19% of that investment. By today’s standards, these numbers look almost impossibly small. But they captured a technology economy at the beginning of something.

Some of the earliest startups are gone; others have become major African technology companies. Founders have changed their business models, investors have rewritten their playbooks, and regulators have caught up with industries that barely existed when the first cheques were written. Markets once considered too difficult are now crowded, while some assumptions about Africa’s startup boom have proven wrong. The companies that survived offer a better way to understand the past decade than funding numbers alone do.

The most important change may be that the ecosystem became capable of producing its own momentum. In 2016, a founder who wanted to build a technology company in Africa had to secure not only customers but also the infrastructure, talent, capital, and investors needed. “We are now a long way away from 2014, when we begged investors to back companies like Andela,” Iyinoluwa Aboyeji, co-founder of Andela, the global talent marketplace, and fintech unicorn Flutterwave, told TechCrunch in 2023. That transformation began with a relatively small number of bets.

The Hidden Cost of Raising Capital Today

Enter a funding target to see how the ecosystem’s shift toward venture debt is quietly eating startup runways.

In 2019, capital was almost entirely equity. Startups traded ownership for cash, carrying zero mandatory debt repayment burden on their monthly burn.

Fintech was the defining sector of African technology in 2016, particularly in Nigeria. That was not simply because investors liked financial technology. The opportunity was unusually clear. In 2016, 40.1 million Nigerian adults—41.6% of the adult population—were financially excluded, while just 36.9 million people, or 38.3%, had a bank account, according to data from Enhancing Financial Innovation & Access (EFInA). Mobile phones were already far more widely distributed than formal financial services, creating a large gap between how people were transacting in their daily lives and the institutions available to serve them. The opportunity was to build the digital rails for economic activity that was already happening outside the formal banking system.

Companies such as Paystack, Flutterwave, Interswitch, Safaricom’s M-Pesa, and later Moniepoint and OPay solved different parts of that problem. Some built payment infrastructure; others built consumer wallets, merchant networks, or digital banks. They helped establish a market that investors could understand, and customers could use. Fintech became part of the ecosystem’s infrastructure and remained dominant even as the ecosystem expanded.

But success also had a cost. Capital began to cluster around familiar business models. If payments and financial inclusion were the clearest examples of technology solving large African problems, investors naturally looked for the next payment company, the next digital bank, and the next lending platform.

The result was an ecosystem that became very good at building financial businesses. It was less obvious whether it could build companies in industries where the path to scale was slower, capital requirements higher, and regulatory risks harder to price. That question is still unresolved.

Can your 2016 startup survive 2026?

The African technology ecosystem has changed dramatically in ten years. The companies that survived had to change with it.

$206.3M raised in 2016 (56.2% of total ecosystem funding).

Large potential markets that did not automatically translate into enough profitable demand.

Slower path to scale, higher capital requirements, and harder-to-price regulatory risk.

The market got bigger. Customers didn’t suddenly get richer.

Millions of potential users ≠ millions of profitable customers.

How the gap between market size and customer profitability actually plays out in the ecosystem.

Ten years later, the test is different.