Latest batch of YC more than halves presence of African startups

Last month, Y Combinator said it intentionally reduced its summer cohort by 40%. According to the accelerator, the decision to reduce the size of the S22 lot – significantly smaller than its most recent lots – was the result of the economic downturn and changes to the venture capital funding environment this year. p>

It was the latest in a series of slowdown, layoff, and hiring freeze events the tech world was all too familiar with — and to some, it came as no surprise .

YC's summer cohort includes 240 companies, which is significantly smaller than its winter 22 cohort, which had 414 companies. So it came as no surprise to anyone that this reduction spilled over to other regions; for example, eight startups in Africa entered the accelerator this summer compared to 24 in the previous batch, representing a reduction of 60%. While the region made up about 6% of the entire winter batch, it's 3% for this batch.

When YC moved away during the pandemic, the number of companies it accepted in subsequent batches from summer 2020 skyrocketed, as did the number of African startups. While this summer batch is still remote, this is YC's first in-person batch in the past two years: approximately 30% of the batch moved to the Bay Area during its three-month program , and about 23% were already in the Bay Area. when they applied to YC. Therefore, it is plausible that being an in-person event has led to fewer African startups.

All eight companies in this summer batch say they are remote. But purely geographically, five are based in Nigeria, one in Kenya and one in Ghana, and one, although focused on Africa, is based in Geneva. They seem to face challenges around accessing financial services and payments, food delivery, merchant accounting, and wholesale automobile purchases.

Fintech… and others

Fintech is Africa's hottest startup segment, and startups here represent the largest percentage of any typical YC cohort - in this case, five out of eight are fintechs. The most funded sector in Africa is also fintech. One of the reasons it attracts the most venture capital dollars is the high cost of building a fintech product when factors such as onboarding, compliance, and licensing are considered. p>

Globally, banking-as-a-service (BaaS) platforms, such as Unit and Treasury Prime, have helped newly launched businesses scale to thousands of customers. And as financial services proliferate in Nigeria and the rest of Africa, just like in the rest of the world, it makes sense that new entrants offering neo-banking and integrated finance services would rely on BaaS platforms. such as Anchor - one such startup - to get started quickly.

Meanwhile Bridgecard, an Anchor partner, provides card issuance APIs to enable businesses to create virtual or physical cards, one of many offerings from neobanks in Africa. And speaking of neobank offers, Moneco, launched by three founders from finance and payments, targets migrant communities in Europe, starting with the African diaspora. On the other hand, Pivo (the second all-female team in a single batch since Tress, a former social community for black women's hairstyles, in 2017) focuses on cargo carriers in Africa.

While Pivo helps small and medium freight companies with cash flow problems by providing bank accounts, Patika aims to solve the same problem for more companies with its SaaS accounting tool.< /p>

According to reports, Africa will have the second highest number of vehicle owners in the world by 2050, with 400 million vehicles, spending more than USD 1,000 a year on spare parts. It's a huge market where YC hopes Garage Mobility can be a dominant player in the years to come. It also shows how big YC is betting in the auto parts supply chain in Africa by backing Mecho Autotech – whose business model is more retailer centric and leans towards auto maintenance and repairs compared to the Garage wholesale – in the previous summer batch.

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