BusinessDay

African startups raise $2.25bn in first four months of 2022

A total of $2.25 billion was raised in funding activities by tech companies in Africa in the first four months of 2022, according to data from the Big Deal compiled by Max Cuvellier, Head of Mobile for Development, GSMA, and Maxime Bayen, Senior Venture Builder for BFA Global.

The $2.25 billion represents 2.5 times the amount the startups raised by the end of April 2021, five times the amount raised in 2020, and 8 times the amount raised in 2019. It is also already more than half of the total amount that was raised in 2021 at $4.4 billion. The $2 billion milestone was reached in 17 weeks, almost twice as fast as in 2021 which took 30 weeks.

“If the ecosystem can maintain this momentum and keep raising over half a billion dollars a month on average throughout the year, it is on track to raise almost $7 billion in 2022,” Cuvellier noted.

April 2022 saw the least amount of funding with the total raised at about $430 million. However, Sun King, a Kenyan renewable energy startup raised $260 million in Series D to surpass the $250 million raised by Flutterwave in February. The Kenyan-based company’s funding is the sixth Series D ever recorded on the continent, and the largest one to date. It is also the third-largest deal ever closed.

The biggest funding came in the month of March when the startups attracted about $710 million. It was followed by February with $630 million and the crowning of Flutterwave is the most valuable tech startup ($3 billion valuation) in Africa. The startups raised $480 million in January.

Data on the first quarter of 2022 shows that majority of the funding has gone to four countries. Nigeria leads the way with $600 million, followed by Kenya with $482 million, South Africa with $228 million, and Egypt with $202 million.

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Notwithstanding, the tech ecosystem is yet to record a new unicorn unlike in 2021 when Flutterwave saw its valuation soar to over $1 billion after it raised $170 million in Series C.

Experts had predicted a tech funding slowdown as investors began to ask high-impact startups to go back to the basics – chase profits and reduce their cash burn. The shutdown of companies such as Fast which raised $100 million a year before it closed shop, has investors pulling back from writing cheques for tech companies. In India, tech companies have been laying off workers with as many as 1,800 fired as of April 2022.

“With the tech slowdown on the way, I hope that in Africa we can move away from obsessing overvaluation and focus on value creation. In 2021, at least 3 startups on the continent crossed $100 million in annualised revenue. Average time to $100 million? 4.7 years,” said Peter Oriaifo, Principal Investor with Oui Capital.

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