Between 2021 and 2022, the number of new startups focusing on Africa’s healthcare supply chain fell by 21%. This is according to a newly released report by Salient Advisory, a healthcare consulting firm.
After witnessing a boom due to the COVID-19 pandemic, fewer startups have been founded since then, and the report points out that this decline could be caused by falling demand for digital-first products, a saturation of companies in the space, and a decline in funding for the sector.
The report, which surveyed more than 300 healthcare innovators in 27 countries, reveals that 60% of African startups in the supply chain sector are headquartered in Nigeria (24%), South Africa (15%), Kenya (11%), and Egypt (10%).
Outside these four countries, 12% of startups in the sector are headquartered in Francophone African countries, while 10% are headquartered outside Africa. Interestingly, most growth-stage and mature companies are headquartered outside Africa.
The healthcare supply chain industry follows a familiar theme of being heavily dominated by male founders, and the report states that only a "few companies founded solely by women exist."
Of the surveyed startups, 55% were founded by men, 16% by mixed teams, and only 8% by women. The gender disparity is not limited to the founding teams and extends to funding and company stages. 83% of startups solely founded by women are in the early stages, and 91% of all funding in the sector went to male founding teams.
The difficulty female founders encounter when raising funds is also reflected in the funding sources they pursue. 35% of funding raised by women was grants, while debt funding was responsible for 15% of funding. In contrast, only 3% of companies founded by men received grants, while 1% of men raised debt funding.
Some of the female founders surveyed for the report disclosed that gender biases made it harder for women to raise capital. In addition to raising less money than their male counterparts, they also reported spending more time on the process. One founder revealed that she had been fundraising since 2021, while another stated that lip service was being paid to the issue of funding women with little done to change the status quo.
Although Nigeria and South Africa account for the highest number of companies founded by women, it is startups in East Africa that are responsible for most of the funding.
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The general state of funding in this sub-sector mirrors the overall state of healthcare funding on the continent. Although 41% of the companies featured in the report have raised external funding, two companies – Glovo and Zipline – account for 67% of the total funding raised. When eCommerce and drone delivery companies are excluded, the other companies surveyed for the report have raised $584 million since they were founded.
As these companies grow, there’s an increasing appetite for partnerships with governments and private institutions. However, only 8% serve governments or public institutions, with 60% of them being growth-stage companies.
These partnerships with government institutions are accompanied by certain challenges. One of these is the slower pace of execution at public institutions. Where startups are more inclined to quick processes, public institutions take their time. The low rate of digital literacy among government institutions is another challenge faced by startups, while funding limits their ability to take on larger projects.
