Investment in Nigerian startups so far in 2021 is on a high level with big foreign venture capital (VCs) firms betting big once again with their cheques. For the first time since 2019, startups in Nigeria have twice raised funding above $50 million and it is just August.
By the end of March 2021, the startups have already surpassed the entire amount raised in all of 2020 by raising over $219 million compared to the $170 million raised in 2020. As in previous years, foreign VCs and equity firms have dominated the funding scene. However, local venture firms and angel networks have made a remarkable comeback in 2021 with several of them leading some significant funding raises.
Foreign investors have led about 70 percent of the investments and in the process brought in over $260 million. Nearly, all the big-ticket investments went to fintech companies in Nigeria.
Here are the four most active investors we identified by the size of their investments and the number of times they have invested this year.
Tiger Global is the most active investment company in Nigeria by the size of funding it has led so far this year. The US-based hedge fund was a co-lead in the $170 million Series C raise by Flutterwave back in March and the $42 million Series B raise by Fairmoney in July.
Founded in 2001 by Chase Coleman, Tiger established itself as a force in pre-IPO tech investing well over a decade ago after winning bets on companies like Facebook and LinkedIn. With the explosion of billion-dollar-plus tech start-ups and the trend toward staying private longer, Tiger’s name has since become more prominent by the year. CBInsights in its latest funding report adjudged Tiger Global as the most active investor globally in the second quarter of 2021 averaging about 1.3 deals a day in that period.
Earlier in 2021, Tiger Global raised a $6.65 billion fund, barely a year after it secured $3.75 billion. The investments in Flutterwave and Fairmoney are the first time the investor is investing in two African startups in a calendar year.
Target Global is the second most active investment company so far, although its cheques have only gone to one fintech company, Kuda Bank. Target Global has participated in the last three funding rounds closed by Kuda Bank and taken the lead and co-lead positions in two of the rounds.
Target Global started investing in African tech startups for the first time in November 2020 when it led the $10 million seed round in Kuda Bank. It then participated in the $25 million Series A round in March 2021 and finally co-led the $55 million Series B in August. This means that Target Global has helped Kuda Bank raise $90 million.
The Berlin-based private equity firm currently has over €1billion in assets under management. While about 70 percent of its funds go to Europe-based startups and 20 percent to startups in Israel, Target Global has dedicated about 10 percent of the funds to what it designates “opportunistic investments”, mostly in emerging markets. And in Africa, it has so far found a home in Nigeria’s Kuda Bank. Target Global’s investments in the digital bank platform have seen its valuation rise to $500 million. It is likely to join the unicorn club by the next round.
Valar Ventures, the third most active foreign VC appears to be following in the footsteps of Target Global. Valar Ventures began its journey investing in African startups also with Kuda Bank when it led the $25 million Series A in the fintech company. It was also a co-lead in the $55 million Series B funding in Kuda Bank in August.
Valar Ventures, founded in 2010 by Andrew McCormac, James Fitzgerald, and Paypal’s co-founder Peter Thiel, has raised over $1.2 billion across 10 funds. Valar Ventures has now helped Kuda Bank raise $80 million across two rounds.
Avenir Growth Capital
The fourth most active investor would be Avenir Growth Capital, a New York-based private equity firm that co-led the $170 million Series C round in Flutterwave.
Founded in 2017, Avenir Growth Capital is a private investment firm based in New York, New York. The firm focuses to invest in growth-stage companies operating in media and TMT sectors.
The four foreign investors have all backed startups in the fintech ecosystem so far. They have also minted a unicorn in Flutterwave and Kuda Bank which is halfway to becoming a unicorn. With about five months left of the year 2021, the fintech ecosystem might still welcome a unicorn. There is still a possibility of other foreign investors increasing their stake in the tech scene in Nigeria and perhaps pushing total funding towards the $1 billion mark.