Africa’s tech ecosystem came out of the pandemic with very interesting numbers, as opposed to over $400 million and $2 billion that was jointly raised by startups in the continent in 2015 and 2019 respectively, 2020 made the numbers in four-folds.
Mega rounds became the new normal on the continent this year. According to The Big Deal, African startups had closed more than 800 deals over $100,000 worth a combined $4.27 billion as of December 20th, this new milestone dwarfs the entire 2020 total of $701.46 million in 2020.
With four countries – Nigeria, South Africa, Egypt, and Kenya taking the lead and accounting for 80% of the total raised on the continent in 2021 [35% of the capital raised in Nigeria alone].
In this report, we analyzed the funds raised by startups in Nigeria, Kenya, South Africa, Egypt, Ghana, Uganda, Ivory Coast, Algeria, Togo, Morocco, Malawi, Cameroon, Tunisia, Côte d’Ivoire, Sierra Leone, Botswana, Senegal, Sudan, Rwanda, Ethiopia, and Zambia.
NIGERIA: The Largest Funding Rounds
Before the pandemic and corresponding shutdowns, investment activities in Nigeria experienced a dip thus slowing down financing activities.
According to PUNCH, a BusinessFinancing.co.uk study has shown that Nigerian startups lost 74.4% of their venture capital funding in 2020. Although few startups successfully raised, the state of the epidemic was not favorable for many others.
However, the tech industry has seen a rapid expansion of its investment activities this year thus, outpacing the previous year.
The top funding rounds in Nigeria started with Flutterwave’s $170 million Series C in March, then others like Andela’s $200 million Series E fund, TradeDepot’s $110 million Series B. Opay also secured $400 million in a Series C round, Kuda’s $25M Series A is also one of the top rounds that were closed in the country.
From our findings, 75 startups raised funds (13 pre-seed funding, 49 seed funding, 8 series A, 3 series B, and 2 series C} between January 2021 to December 13, 2021.
Therefore, raising about $ 1.5billion (excluding undisclosed rounds).
After Nigeria, South Africa took the lead with over 27 startups raising seed funding, 5 Series A funding, while 3 secured pre-Series A rounds, and then 1 each in Series B and C funding rounds.
Biotech startup LifeQ-closed a $47 million Series A funding, fintech startup Yoco raised $83 million in a Series C funding, Ozow secured a $48 million Series B fund, JUMO’s $120 million seed funding was a big deal too. However, Tymebank’s $109 million capital raised was the highest investment made in the country’s startup ecosystem.
Note: TymeBank isn’t indigenously South African though. It is a member of the Tyme group of companies headquartered in Singapore. However, the digital bank operates in South Africa.
EGYPT: Experienced a Huge Funding Growth
Egypt is said to be a major destination for funding African startups and highlighting the continental growth prospects for the tech sector. Thus, Egyptian startups have had a really good year. In Q1 of the year, 34 companies raised $22 million – double the amount raised in the last quarter of 2020.
Its Fintech company, MNT Halan has the highest increase in seed funding by raising $120 million. We calculated the number of about 26 startups in seed funding, 8 in pre-seed, 8 in series A and 1 in series C.
Egypt raised $588 million excluding undisclosed rounds.
Ghana has emerged as one of the strongest and most developed startup ecosystems on the continent. With the growth of its business activities, Ghana’s emerging tech scene has caught the attention of many investors and appears to be on its way to becoming one of the largest tech economies.
With more Ghanaian tech talents being sought after by global companies, their 2019 venture capital investment based on Partech’s 2020 report reads $111 million from the $2 billion raised by African tech startups in 2019.
Ghana’s earnest achievements have resulted in about ten technology start-ups namely Jetstream, Zeepay, OZÉ, AgroCenta, Redbird, Complete Farmer, BezoMoney, and SFAN, raising funds this year with MFS receiving the largest raise of $100 million in a Series C funding round, making its total raise an estimate of $113million.
In the early 2010s, Kenya’s fledgling tech ecosystem was used as an acronym for a broader narrative of ‘a rising Africa’. It was immediately dubbed “Silicon Savannah” as startups emerged and tech talents poured into the country from different parts of the world.
With its rising tech growth, the country has had a total of about 37 startup raises in 2021 with 6 in pre-seed funding, 19 in seed funding, 1 pre-series A, 3 Series A, 1 Series B, and C each. With a total raise of about $375M (undisclosed rounds excluded).
Uganda has a total of 6 startup raises with its top spot and success raise from a fintech company, Chipper Cash which raised a total of $250M in a Series C funding. Its other top spots are insurtech, Oko- seed funding of $1.2M, and fintech company Numida- seed funding of $2.3M.
Note: Chipper Cash is not independently Ugandan. It is an African cross-border payments company based in California but offers payment services across 9 countries: Uganda, Tanzania, Rwanda, Nigeria, South Africa, Kenya, US, UK, and Ghana.
Wave, a Senegal-based mobile financial services startup, has become the first unicorn (a term used to describe startups with a market capitalization equal to or greater than $1 billion) in Francophone Africa after it raised $200 million in its Series A round of funding in September this year. The mobile money service provider is now worth $1.7 billion.
Despite the rise of many French-speaking startups, a mature entrepreneurial ecosystem, and a growing interest in the African tech market that constantly attracts many investors, Francophone Africa still benefits less from financial investments. According to a report by Partech Ventures on Financing Startups in Africa, amid a record result for the continent, only 1% of the $1.16 billion of equity raised by African Tech Startup in 2018 was allocated to French-speaking Africa.
This year, the percentage records show Francophone Senegal making 13% from the estimated $4.5 billion raised. Also, Cameroon 0.7% and Ivory Coast 0.3% according to figures provided by TechCabal. Meanwhile, 86% flock to start-ups in West Africa.
This low level of startup investment activity, compared to Nigeria which achieved 35%, is a representation of the funding gap that exists between English-speaking and French-speaking Africa despite having a great deal of talent in Francophone African countries.
Disrupt Africa recently said francophone startups are not able to raise comparable funding to their English-speaking counterparts, due to several factors among which the French-speaking African market is perceived as small by investors, and the level of investment readiness for French-speaking African startups is weaker than that of their English-speaking counterparts, and third, the venture capital culture is less well established in these regions.
However, the World Bank launched the l’Afrique Excelle Programme, to help address these critical gaps for French-speaking African entrepreneurs and create a set of angel networks in West Africa to expand and accelerate their investment capabilities and potential.
With Waves setting the definite success, CinetPay, a digital financial platform in francophone Africa, is another startup driving boom rates with an initial $2.4 million fundraising round from 4DX Ventures and Flutterwave.
Other increases this year include Ejara Cameroonian crypto startup – seed funding ($2 million), Senegalese startup Yobante Express – seed funding ($1.2M), with ride-hailing startup Kai Senegal raising an undisclosed seed funding round.
With aggregated figures from 15 other countries – Zambia, Ethiopia, Rwanda, Ivory Coast, Sudan, Botswana, Tunisia, Sierra Leone, Côte d’Ivoire, Malawi, Morocco, Togo, and Algeria, making a total of 21 startups in seeding funding, these countries have raised an estimate of about $134.9 million (undisclosed rounds excluded).
With Africa reporting significant growth in the number of startups getting funding in 2021, this is undoubtedly an indication that there is a welcome development, and that the Nigerian tech space is moving forward.
Technology is one of the sectors that continues to consistently deliver huge returns to the broad scope of the economy. Therefore, we hope to see more investments shortly.