(Agence Ecofin) – 51% of blockchain-focused start-ups are still in the idea phase and 39.7% are in the growth phase. Only 1% of these entities are firmly established and profitable.
According to a report published Oct. 5 by the specialist think tank Africa Blockchain Institute, difficulties in raising funding are the biggest challenge facing blockchain start-ups in Africa.
To determine the key challenges facing African blockchain-focused startups, the authors of the 2022 edition of the Africa Blockchain report surveyed a representative sample of startup founders in the sector across four continents: Rwanda, Ghana, Egypt and Zimbabwe.
This shows that 55.9% of the entrepreneurs surveyed cite lack of financing as the main challenge for developing their start-ups.
49.2% of respondents believe that misconceptions about blockchain technology are also a brake on the development of start-ups. According to them, these misconceptions mainly have to do with an amalgamation of blockchain technology and cryptocurrencies and with the perception of blockchain as a breeding ground for illegal activities.
44.1% of industry players surveyed also cite the lack of a regulatory framework for Blockchain as a major challenge, while 42.4% are concerned about insufficient access to training in technologies, blockchain and 23.7% indicate the lack of access to incubators.
Entities in the early stages of their development
When it comes to the support they need, 62.7% of founders cited funding, before market entry support (41%), training (37%), acceleration (32%), entrepreneurial mentoring ( 32%) and incubation (15%).
The report also reveals that the blockchain solutions most developed by African start-ups are:
- smart contracts (19.4%)
- cryptocurrency exchange platforms (15.4%)
- creation of non-fungible/NFT tokens (12.1%)
- cross-border payment solutions (10.5%)
- identity management systems (8.5%)
- information management systems (10.5%)
- supply chain monitoring and traceability systems (7.3%).
Analysis of the blockchain startup ecosystem on the continent also shows that the vast majority of these startups are still in the early stages of their development. 51% of the start-ups are still in the idea phase and 39.7% are in the growth phase. Only 1% of these entities are firmly established and profitable.
The report also points out that 51.7% of blockchain startups have been in business for less than a year, while 44.8% are between 1 and 5 years old, making Africa almost virgin territory for entrepreneurs. .
On another level, the report looked at the profile of blockchain developers. These are usually young. 64.4% of them are under the age of 30. 58.6% of developers are undergraduate students and 31% are pursuing postgraduate studies.