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VCs set sights on African countries beyond the ‘Big Four’

Africa’s tech startup scene has grown significantly over the last decade, with various reports showing a sizable increase in the number of deals, ticket sizes and funding. Last year, startups in the continent raised about $5 billion, double what was raised in 2021 and nine times the amount from five years ago.

However, this growth has been focused on four countries — Nigeria, Kenya, South Africa and Egypt, known as the “Big Four” because they account for more than 70% of venture capital investment into the continent.

But VCs are shifting their attention elsewhere, reaching startups in at least 29 countries last year, up from 26 in 2020. Outside the Big Four, investments ballooned to $1.4 billion, up 382% year on year, according to Partech's 2021 report.

What could be driving the sudden interest in other African countries?

“Investors are looking for better-priced but quality deals in these markets. Deals in the Big Four have become overpriced and competitive with the entry of foreign investors,” Nairobi-based Novastar Ventures associate investment director Abel Boreto told TechCrunch.

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