Nigeria Leads Africa in AI Startups, Despite Funding Gap
Nigeria continues to host more artificial intelligence startups than any other African country, but the capital they raise remains low.
Tracing the data of 207 AI startups, which span across the continent, Nigeria ranks 50, edging out South Africa, and way above Kenya.
In the latest founding cohort, Nigeria again recorded the highest number of companies launched.
However, the funding for companies in Nigeria is about 47 million dollars, far below Kenya and South Africa.
An interesting observation about the Nigerian AI scene is that although it is creating the most companies, many of these startups remain capital-light.
Some of the local startups focus on applications such as fraud detection, credit and risk scoring and regulatory compliance solutions for financial institutions.
Many of the local startups come out of accelerators run by global technology companies.
The trend of record company formation but thin funding has become a talking point in founder and investor forums.
While some investors say the lack of funding is due to the reluctance of investors to fund series B and beyond, others believe that Nigerian startups are capital-efficient and focus on specific problems.
There is also concern that the Nigerian AI startups will not be able to graduate from products and accelerators to large-scale companies that could secure significant funding in Series A.
The figures show the dynamism of the Nigerian entrepreneurship ecosystem, while at the same time highlighting challenges in raising sufficient funds to scale these businesses.
Nigeria has a robust AI company formation ecosystem, but the question now is whether this will translate into significant funding, scale-ups and sustainable AI businesses.
