InvestmentStartups

Startups in Africa have raised a whopping $1.14 billion+ through deals of $1 million and over

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With the completion of the first half of the year 2021, it is important to stocktake, and evaluate the progress of African startups with regards to the goal of securing funding to scale. With phenomenal achievements in funding, during this first half of the year, startup funding reached a record high of ~$1.2bn+ raised through deals $100k and over. Startups have registered at least $100 million every single month through this year, a significant growth from past years. This report is drawn from Maxime Bayen and Max Cuvellier, who outline clearly the interactions and activities that have resulted in funding deals across the continent within the last six months.

Image credit: Maxime Bayen & Max Cuvellier, 2021.

These investments are spread across the top 5 markets in Africa: South Africa (28%), Nigeria (27%), Kenya (13%), Egypt (11%), and Ghana (10%). South Africa and Nigeria alone together attracted more than half of the funding raised so far across the continent. The rest of the deals were shared across 19 markets, representing together just a mere 10%. This helps to represent the success in closing big deals that many African startups have been capable of within the first half of the year. Focus on Africa is growing considerably as many startups within the continent are curating innovative solutions to social and economic challenges. With the expanding market in Africa, many investors are seeing opportunities to grow and scale, in the rich wealth of talent and innovation that many startups are riding on. As always, now is the time to invest in the future of Africa.

While South Africa is doing relatively better than Nigeria in terms of closing out deals, since 2019, Nigerian startups have raised more than 38% of the total amount raised on the continent. A further breakdown of funding stats shows that about 85% of the total in Nigeria is raised by all-male founding teams. Nigerian fintechs are performing exceptionally well, and possess a huge potential for expansion especially with inroads into credit-led neo banking models. With much of the funding this year going to fintech startups, fintech startups are also increasing on the continent, with a growth of about 17.3% this year, from 491 to 576 fintechs. When it comes to investments and acquisitions, the space is leading the pack, with over 277 fintechs banking a staggering $874 million within the last six and a half years, twice more than any other vertical has raised within the period. This growth in funding and market share is particularly driven by the three mega markets of Nigeria, South Africa, and Kenya.

Without a doubt, Nigerian startups can still do better than our South African counterparts in securing deals, especially with the huge number of startups that are present in the country.

Image credit: Maxime Bayen & Max Cuvellier, 2021.

Even with all this, about $150 million has been further raised even in the new half of the year, which has been captured by Nigeria’s FairMoney (over $42 million of the bulk of $100 million from Nigeria), and Egypt’s MaxAB that had recorded about $40 million from a total of $42 million. Investors will be more concerned with the startup innovations on the African continent seeing the sizable chunk of investment that the continent is attracting this year.

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