African startups on Y Combinator’s top companies list for 2022

African startups on Y Combinator's list of top companies for 2022 - Startup Lagos

Startups growth globally has been phenomenal

The African startup ecosystem has been taking the news by storm of late. However, while the growth of startups in Africa is remarkable, it is expected, especially as ticket sizes are growing, and companies are moving further along the stages of investment raises. The importance of the story for Africa, when put in context, can be better seen when one realizes the youthful potential of Africa’s vast and geographically expansive continent. With the wealth of material and human resources incubating on the continent, and the increasing penetration of digital technologies on the continent, there are numerous vistas of opportunity opening up across Africa’s ecosystem.

Globally, startups have been performing phenomenally, with a lot of patient cash ready to be put into funding startup growth. Last year, CB Insights records that over $621 billion came into the global startup ecosystem last year, more than double of what was raised in 2020. This massive growth also helped to spawn a lot of billion-dollar companies, with the number coming up to a record 959 unicorns. Just into the new year, the unicorn club has grown beyond 1,000, showing the powerful potential that startups across the globe are having on geographical markets.

Y Combinator’s accelerator program: Mentoring the best

Every year, Y Combinator since 2018, releases a mega list of top companies that are valued at $150 million and above, that have passed through the accelerator program. This first list captured over 101 diverse and dynamic startup companies across the globe. Y Combinator is highly renowned for its accelerator program that aids a lot of startups to gain the right mentorship and traction needed to grow to billion-dollar companies. Some of the biggest YC-backed companies that have succeeded over the years are Stripe, Airbnb, DoorDash, Coinbase, Dropbox, Reddit, Docker, Heroku, Zapier, etc. With this wealth of top-performing startups as alumni, YC is the best place for any early-stage startup to be.

Y Combinator is one of the biggest accelerator programs globally. Source: Vox, 2019.

According to YC Database, over the last 17 years, about 3,001 companies have passed through the YC program including the current W20 cohort. Of this number, over 703 companies have exited, with about 902 companies officially inactive. The failure rate of companies on the program stands at 31%, which is not bad for the industry. While over 703 companies have exited, some may have exited at losses, or are struggling to keep afloat in the market. Yet, that is significant growth from what is reckoned as the most popular and geographically diverse accelerator program globally.

Over the years, the YC list has grown from 101 companies to its present 267 as of February 2022 (It is said that some companies opted out of being listed; as such, the number would have been even more than it is). Part of this growth in number is attributable to the fact that the list has broadened to accommodate companies outside of America. While in 2018, there were no African companies listed, this year’s Y Combinator’s list carries a significant six.

Africa’s six representatives: Y Combinator’s finest

Flutterwave is the first African company on the list at 35th. The company had only recently achieved a remarkable milestone of reaching $3 billion in valuation, after its $250 million Series D raise. Flutterwave is generally charting the course of payments tech in Africa, with its remarkable product. Through partnerships with other companies, Flutterwave is further cementing its market presence and ensuring that the solutions that it brings to its teeming customers are not just relevant but timely.

The second African startup on the list is Wave Mobile Money, francophone Africa’s first unicorn. The Senegalese unicorn comes in at 53rd, with a strong showing last year, after accomplishing what remains the largest ever Series A round for the region. At a valuation of $1.7 billion, Wave is driving the fintech movement in French-speaking Africa. The company is also the first to reach unicorn status in the francophone region.

Reliance Health is the next African startup to feature on YC’s popular list of companies, appearing at 204th. The Nigerian health tech company only recently closed a Series B funding of over $40 million, led by General Atlantic. The company is making healthcare a lot affordable for its customers through the provision of health insurance, telemedicine, and a combination of other product offerings.

Paystack, the only African company of the entire cohort, to have exited, comes in at 232nd. Acquired by Stripe in 2020 for $200 million, the company has continued its vast expansion of operations across Africa. Partnering with other top tech firms like Apple Pay, users on their platform are able to access a wealth of services that make international payments easy and seamless for them.

The next African firm on the list is the Algerian logistics and last-mile delivery startup, Yassir, which is the first Algerian startup to get Y Combinator’s backing. The company had pivoted last year to a super-app model to help provide its users, especially within the Francophone region, with a wide range of services. The startup is listed as the 247th.

Finally, Kudi, Nigeria’s dynamic fintech company appears on 263rd. The company is creatively solving financial challenges for African communities and providing one of the fastest and most reliable financial services to its vast clientele.

Greater geo-diversity

With YC’s intention to increase the batch lists to over 1,000 startups, as well as democratizing the opportunity more for newer regions, this list is only going to grow bigger in the coming years. What this implies is that more startup companies, especially within Africa, will have access to the YC program and even greater opportunities to grow and scale across Africa.

Of all the startups on the list, apart from the US, India is the only other country with the most representatives.

As Africa’s startup ecosystem continues to fire hot in investments and opportunities, it is important that startups across the continent are positioning themselves appropriately to capture these benefits.

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