African startups use US for fundraising, UK for licences, UAE for operations
A study of 100 African tech firms shows US leads in incorporation, UK in licences and teams, UAE in operations.
Africa’s technology startups often connect internationally to access capital, licences, and operations, according to a new study by TLP Advisory.
In our view, the fact that 76.5% of Nigerian startups raise funds in US dollars but earn revenue in naira poses a significant challenge that needs attention. We wonder how schools and training programs can better prepare young entrepreneurs and workers to navigate these currency and financial complexities in global tech markets.
The report, Home and Away: Tracking African Tech’s Global Footprints, examined 100 companies from Nigeria, Ghana, Kenya, South Africa, Egypt and Morocco with links to the US, UK or UAE.
It found that 67% of the companies had a US affiliation, primarily for incorporation and fundraising. About 90% of those were incorporated in the US, but in 81% of cases this was their only US connection. Only 3% held a US regulatory licence.
US incorporation offers a legal structure familiar to international investors but does not imply relocation of employees or operations.
The UK connected to 32% of the companies, with 84% incorporated there. Unlike the US, 47% had operational presence in the UK and 19% held regulatory licences, compared with 3% in the US and 4% in the UAE.
Odunoluwa Longe, co-founder of TLP Advisory, said the UK appeals beyond incorporation to local teams, customers and licences. It also offers access to investors, a familiar legal system, tax incentives for early-stage investments and routes to public markets via the London Stock Exchange.
The UAE was affiliated with 23% of the companies, but had the strongest operational presence. Among those, 87% maintained operations in the UAE.
Flutterwave founder Olugbenga Agboola noted that while Africa remains the home for many startups, building large tech companies requires access to international capital, talent and opportunities.
The report also highlighted financial challenges. For example, 76.5% of funded Nigerian startups raised money in US dollars but earned revenue in naira, making dollar-denominated costs more expensive due to currency weakness.
Startups establishing entities abroad must also cover regulatory compliance, staffing, marketing and customer acquisition costs, with no guarantee of commercial success.
Sources
Source: Business Insider Africa
