African startup raised $1 million every 2 hours in 2021
African startup raised $1 million every 2 hours in 2021
Even the most casual observer would agree that the year 2021 marked a watershed moment in the development of Africa's technology ecosystem. It was the year in which more funding rounds were announced than we could keep up with, making it difficult to keep track of everything. The year 2021 is expected to see more than $4 billion in funding for startups across the continent, according to various sources. This represents a more than twofold increase over the amount invested in 2020.
Numbers, they say, don't lie, and we'll be extracting some insights from Briter Bridges' Africa Investment Report 2021 as well as data from Africa: The Big Deal to prove it.
The availability of financing for women-led startups must be improved
An extensive amount of literature has been produced on the nearly complete lack of funding for female-led businesses. However, while startup funding continues to grow, it continues to be biased in favor of companies led by men or having at least one male founder.
According to The Big Deal, only 0.95 percent of African startups that received funding were founded or led by a female founder or leader. The fact that funding raised in 2021 was 2.5 times greater than funding raised in 2020 explains in part why this percentage is lower than the percentage raised in 2020 (2 percent).
While the total amount of money raised by women continues to rise, the percentage of funding going to startups founded or led by women continues to decline, falling from 4 percent in 2019 to 0.95 percent in 2021, according to the National Women's Business Council.
However, it should be noted that women in general have a more difficult time raising funds than men, which is understandable given Africa's fledgling startup scene. However, there is more that can and should be done to support female-founded businesses in Africa. Fortunately, it appears that more investors are willing to do so, with firms such as FirstCheck Africa investing in female founders to demonstrate their commitment.
Fintech reigned supreme
Fintech startups, as has been the case in recent years, are expected to receive the majority of funding in 2021, according to predictions. As reported by Briter Bridges, fintech startups received 62 percent ($2.9 billion) of the total funding in African startups in 2020, more than doubling the 31 percent recorded in the previous year.
Those in the healthtech and biotech fields are closely followed by those in logistics (7 percent), education (5 percent), and cleantech (5 percent) (5 percent ). Paying for goods and services remains a challenge for businesses and individuals, which suggests that Africa's fintech sector will continue to be Africa's preferred investment destination for the foreseeable future.
4 countries still dominated
Similarly to how fintech and men continue to dominate funding received, Africa's funding scene is still dominated by the Big Four – Nigeria, Egypt, South Africa, and Kenya – as it has been for decades. For example, Nigeria receives $1.5 billion in funding on its own behalf.
Egypt is a country that deserves to be discussed. It is the fourth most active technology startup ecosystem in Africa, behind Nigeria, South Africa, and Kenya, with 562 active technology startups. In addition, the amount of funding received by startups in the country has increased significantly over the past year. The report by Briter Bridges, on the other hand, indicates a growing interest in Francophone Africa, which may have been prompted by Wave's status as a unicorn.
Additional transactions totaling more than $100 million were completed
It is not every day that you hear about African transactions valued at more than $100 million dollars are completed. Even when they do occur, mergers and acquisitions are the most common type of transaction, but 2021 saw the highest number of transactions valued at more than $100 million in the history of the industry. It was possible to complete 12 transactions with a total value of at least $100 million, accounting for $1.9 billion of the total funding value.
Andela, which raised $200 million in a Series E round, Flutterwave, which raised $170 million in a Series C round, Chipper Cash, which raised $250 million in two separate Series C rounds, OPay, which raised $400 million in a Series C round, Trade Depot, which raised $110 million in a Series B round, and Jumo, which raised $400 million in a Series C round led by Fidelity Management & Research Company, are among the startups that have raised at least $100 million
While foreign investors have maintained their dominance, local investors have risen to the occasion
For the time being, foreign investors have dominated the funding of African startups. According to Briter Bridges, the United States and the United Kingdom are at the forefront of the globalization movement. For foreign investors looking to invest in Africa, South Africa and Mauritius are the top two destinations. Asian investors have not been forgotten, as interest from Singaporean, Chinese, and Japanese investors has continued to grow in recent months.
However, local African investors are stepping up their game. In 2021, a number of African investors will enter the fray or will raise additional funds. Ventures Platform, Savannah Fund, FirstCheck Africa, LoftyInc Capital, and Flat6Labs are just a few of the investors who have shown interest in the company.
To put it in a more positive light, several facts stand out, including the fact that approximately 43 percent of startup founders attended college on the continent of Europe. Possibly exaggerating, but I believe this will allow them to access a larger network when raising funds for their startups, which is important given that the vast majority of Africa's startup funding comes from outside the continent. It also serves as a reminder that Africa's educational system has a long way to go before it can catch up to its Western counterparts in terms of quality and effectiveness.
African startups are expected to reach new heights in 2021, and it is reasonable to anticipate that they will be equaled, if not exceeded, in 2022. Time will tell whether or not this is the case, but 2022 appears to be a year of increased growth.
