BusinessDay

Fintech pushes funding in African startups to $1.4bn in Q3

Funding activity in Africa’s technology space increased by 16.7 percent to $1.4 billion in Q3 (July-Sep) 2021 from $1.2 billion in H1 (Jan-June) 2021, according to a research report by FBNQuest Capital.

The report titled ‘African Technology Sector Fund-Raising Update’ further showed that the total funding raised in H1 2021 and Q3 2021 is more than the combined funding raised between the period of 2015-2020. This shows that investors are interested in new technology companies (Startups) in the continent.

“Africa’s technology is striving thanks to investors’ long-term bullishness and their confidence in the investee company founders’ entrepreneurship ability and business models,” the report stated.

It further added that as the global economy continues to recover post-COVID, technology innovators will be the biggest beneficiaries of new investments. “Business and investors seek digital alternatives to traditional ways of doing business.”

Out of the estimated total funding ($1.4billion) raised in Q3, Nigeria was the largest recipient (57.9 percent), followed by Egypt (17.1 percent), Senegal (14.4percent), South Africa (7.9 percent), and Kenya (1.0 percent).

In terms of sector, Fintech received 69.6 percent, software development had 15.2 percent, e-commerce had 8.2 percent, hhealth tech had 2.9 percent, logistics had 2.2 percent, agrictech had 1.9 percent and edtech had 0.1 percent.

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“Priors to 2021, only three companies that reached this status in Africa, Interswitch, Jumia, and Famry. However, in March’21, Flutterwave joined the elite list after completing its Series C raise of $170million. Since then four companies other African tech companies have become unicorns,” the report highlighted.

Here are the African tech companies that raised funding in Q3

Opay: In August, this Nigerian digital payment startup secured $400 million in its funding round led by SoftBank Vision Fund 2, valuing it at $2 billion.

Other investors in the funding round include Sequoia Capital China, Source Code Capital, Meituan-backed (3690.HK) fund Long-Z, Redpoint China, and 3W Capital. Before this, Opay raised 50million dollars in June and another $130million in November 2020.

Wave: Wave, a Senegal-based mobile money provider raised $200 million in a Series A round in September, valuing the company at $1.7 billion.

Investors in this round include Sequoia Heritage, a private investment fund and a subsidiary of Sequoia, Founders Fund, payments giant Stripe, Ribbit Capital, Partech Africa, and Sam Altman, the former CEO of Y Combinator and current CEO of OpenAI.

Andela: This Nigerian startup that connects African software engineering talent to global companies became the country’s newest startup to attain unicorn status after raising $200 million from investors.

Andela’s latest round of fundraising which took place in September was led by SoftBank Group Corp., a Japanese tech investor, with participation from new investor Whale Rock and existing investors including Generation Investment Management, Chan Zuckerberg Initiative, and Spark Capital.

Chipper Cash: An African cross-border payments company secured $150 million in a Series C extension round valuing the company at $2billion

The round which took place in October was led by Sam Bankman-Fried’s cryptocurrency exchange platform FTX. SVB Capital, as well as other previous investors such as Deciens Capital, Ribbit Capital, Bezos Expeditions, One Way Ventures, and Tribe Capital, reinvested in this extension round.

The investment comes only six months after Chipper Cash raised $100 million in its first Series C round. The company’s entire Series C capital is $250 million, but it has raised more than $305 million to date.

In addition, reputable accelerators, organizations that offer mentorship, capital, and connections to investors and business partners accepted more African technology companies in the quarter, the report says.

“These accelerators have a significant role in the success of start-ups by providing mentorship, business model refining, and financing to early-stage companies,” the report stated.

According to a TechPoint analysis, 21 of the 51 West Africa start-ups that raised more than one million dollars in the past decade went through an accelerator.

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