• Tuesday, July 16, 2024
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5 highlights of Africa startup funding in 2022

Nigeria’s start-ups show hunger for digital solution at Africa’s biggest pitch competition

Africa startup funding in 2022 broke records in terms of funding raised, the number of deals, and the number of investors, data from Africa the Big Deal has shown.

“The fact that start-ups on the continent raised more in 2022 than in 2021 is unique in itself, as all other continents are set to record a YoY decline,” said Maxime Bayen, Director of M4D Utilities and Ecosystem Accelerator Insights, GSMA and one of the authors of the Big Deal report.

According to the Big Deal, African ventures have continued to raise more startup capital despite a global contraction in funding, making it the only region with an upward trend. Here are some key takeaways from the report:

The total amount of funding recorded by African startups amounted to $4.84 billion in 2022, a 7.62 percent increase from $4.46 billion recorded in 2021. Which eventually might exceed $5 billion, nearly $ 1 billion more than in 2021.

More than 1,000 deals of $100k or more have been announced in 2022, an 11 percent increase from the previous year, which articulated 818 deals of $100k round.

Africa has attracted more interest than ever before, with over 1,000 unique investors participating in at least one deal on the continent in 2022, a 15 percent increase from 800 investors in 2021. Furthermore, launch Africa emerge as the most active investor with more than one deal a week in the period under review.

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The “big four” (Nigeria, South Africa, Kenya, and Egypt) continue to dominate funding raised amounting to $1.2 billion, $1.1 billion, $820 million, and $550 million respectively, accounting for 75 percent of the total funding in 2022, compared to 81 percent in 2021. However, Kenya has moved up to the second spot, overtaking Egypt and South Africa, while Nigeria remains in the top spot in funding.

The Big Deal revealed that, among the big four countries in Africa that have raised significant capital funding, only Nigeria and South Africa recorded a decline in funding in 2022, This decline is attributed mainly to the second-half slump in funding that hit nearly every tech ecosystem on the continent, CB Insights State of Venture Q3’22 report revealed that venture funding in Africa dropped by 54 percent in Q3 2022.

Fintech remains the top sector in terms of funding raised, but its share of total Venture Capital funding has decreased from 53 percent in 2021 to 37 percent in 2022. In the period under review, a total of about $1.7 billion has been raised despite the $5 billion milestone expected by African startups. However, Sunking emerge as the largest deal announced so far with $260 million in its series D funding, Flutterwave raised $250 million in its Series D round, Interswitch, one of Africa’s largest fintech companies, secured a $110 million deal in a joint venture deal with LeapFrog Investments and Tana Africa Capital to increase its presence across Africa with its digital payment services. OPay’s $400 million series C funding raised in August 2021 remains the highest funding by a fintech company in Africa.

Female-led startups have raised more in 2022 than in the previous year, accounting for 2.4 percent of total funding, compared to 0.95 percent in 2021. Meanwhile, the percentage of male CEOs receiving funding has decreased from 93 percent in 2021 to 85 percent in 2022. Also, the report showed that funding raised by the founding team gender mix amounted to 13 percent ($624 million) of the total funding raised by African startups.

A total of 144 startups announced their 1st $1m+ deal funding in 2022, compared to 110 in 2021. More than half of $1m+ deals in Africa since 2019 have had at least one Africa-based investor as one of the main investors, and this percentage has grown quite a bit since 2019.