Table Of Links Table Of Links ABSTRACT ABSTRACT INTRODUCTION INTRODUCTION INTRODUCTION LITERATURE REVIEW LITERATURE REVIEW LITERATURE REVIEW DATA AND METHODS DATA AND METHODS DATA AND METHODS RESULTS RESULTS RESULTS DISCUSSION DISCUSSION DISCUSSION CONCLUSION AND REFERENCES CONCLUSION AND REFERENCES CONCLUSION AND REFERENCES LITERATURE REVIEW The African startup ecosystem has experienced significant growth in recent years, driven by increased investment interest from local and international investors, improvements in technology infrastructure, and a growing pool of talented entrepreneurs. Despite this progress, the African startup ecosystem still faces significant challenges related to the uneven distribution of funding across the continent, with the majority of funding being concentrated in just a few countries and sectors. Therefore, there is a need for more research that focuses on understanding the key factors influencing the amount of funding raised in startup deals across Africa, and how these factors can inform policy recommendations to optimize investment opportunities for African startups. Several studies have explored the macroeconomic factors that influence venture capital investment in Africa. For example, F. Jaoui, O. Amoussou, and F. H. Kemeze [5] conducted a comprehensive literature review to identify the factors that influence venture capital investment in Africa. They identified several key factors such as GDP growth, the size of the domestic market, and the level of economic freedom. Other factors include the availability of skilled labor, the quality of infrastructure, the strength of legal and regulatory frameworks, and the level of innovation and entrepreneurship in the region. They found that the most significant factors influencing the amount of funding raised in startup deals were the size of the domestic market, the level of economic freedom, and the strength of legal and regulatory frameworks. Similarly, J. Munemo [6] examined the relationship between financial development and entrepreneurship in Africa. They found that financial development has a positive and significant impact on new business density in Africa and that improving all the dimensions of financial development, including depth, access, and efficiency, is much more important for supporting entrepreneurship than focusing on a single dimension such as financial depth. They suggest that policymakers should prioritize raising the quality of financial development in Africa to stimulate entrepreneurship, which can be achieved by enhancing regulatory frameworks, promoting financial literacy, and supporting the development of innovative financial products and services. Additionally, different reports dived into the trends of startup investment in the continent. For instance, the African Private Capital Association (AVCA), in its annual report on private capital investments, fundraising, and exits in Africa [7], provides valuable insights into private capital investment trends in Africa and sector-specific trends. In its 2023 report, they highlight that financials, consumer discretionary, and industrials continue to attract the lion's share of the total volume of private capital deals, while information technology, healthcare, and utility sectors are on the rise. By the same token, the reports produced by Disrupt Africa [8] as well as by Briter Bridges [2], offer valuable insights into the African startup ecosystem, particularly with regard to funding trends visa a vis sectors, countries, sectors, product types, and stages. The reports confirm the dominance of fintech in the funding landscape, while also identifying other sectors such as cleantech, logistics, mobility, and e-commerce as having significant growth potential. Additionally, both reports discuss the importance of diversity and inclusion within the African startup ecosystem, which is crucial in addressing the barriers faced by underrepresented groups. While extant literature offers valuable insights into the factors influencing funding in the African startup ecosystem, existing research papers and reports primarily adopt a holistic approach, endeavoring to describe the ecosystem as a whole. Consequently, there remains a lacuna in the literature regarding the specific internal factors that influence funding amounts in startup deals within Africa and the relative importance of these factors. These internal factors may encompass founder characteristics (e.g., gender, education), company attributes (e.g., sector, business model), and investment-related elements (e.g., stage of investment, investor type) and can directly or indirectly impact the deals amounts of startups funding. The aforementioned gap in the literature highlights a need for a more quantitative approach that delves into the impact of different factors, transcending the current holistic understanding of the African startup ecosystem. Author:
Khalil Liouane Author: Author: Khalil Liouane Khalil Liouane This paper is available on arxiv under by-SA 4.0 Deed (Attribution-Sahrealike 4.0 International) license. This paper is available on arxiv under by-SA 4.0 Deed (Attribution-Sahrealike 4.0 International) license. available on arxiv arxiv

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Why Some African Startups Raise Millions and Others Don’t

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