Earlier this month, we reported that investor sentiment around venture capital activity going into this was more muted than bright. I believe it will come this year. But before that, African startups will raise more VC funding last year than when he crossed the $5 billion threshold from his $4 billion in 2021, the first time in Africa. Optimism was shared that
There was reason to believe so. For one, by the first half of 2022, Africa appeared to be bucking declining global venture capital after its startup raised $3 billion. So it seems likely that it will double by December. Insights from data trackers Blitter Bridges, Pertech and Big Deal show that stock trading on the continent hovered around $4.8 billion to $5.4 billion by the end of the year, a slight difference from 2021 figures. It didn’t turn out as expected. .
“Despite the challenges that surfaced in the second half of the year, 2022 was another year of growth for Africa in terms of total capital raised, number of deals and number of investors involved. Investing in Africa in 2022 Regarding the movement, The Big Deal co-founder Max Cuvellier said:
Most tech observers share Cuvelier’s thoughts on VC activity in Africa. However, it’s worth noting that Africa’s reported deals lag behind global deals by weeks or months, so the African continent was broadly flat year-on-year. As before, let’s look at the 2022 numbers from the three data trackers and compare them to the 2021 numbers.
Total funding and number of deals
Briter Bridges: African startups have raised an estimated total of $5.4 billion in more than 975 deals in 2022, including private rounds, according to market research firm. Briter Bridges raised a total of $5.2 billion in more than 790 deals last year.
Partech: A venture capital firm has pledged $6.5 billion (combined equity and debt deals) to African tech companies in 764 rounds. Stock trading accounted for $4.9 billion in 693 deals. But unlike Briter Bridges and The Big Deal findings, Partech’s data reveals that total equity funding on the continent fell 6% from his $5.2 billion in 681 rounds.
The Big Deal: According to the report, African startups have raised $4.8 billion in 1,000 deals. That’s a significant increase from his $4.33 billion in the 2021 820 round.
Sector: Fintech is still clear
Briter Bridges: Despite Fintech being hit hard by the global VC downturn, the sector is the most popular in Africa. In 2021, fintechs accounted for 62% of his VC funding raised by startups on the continent. That number dropped to 38% last year, according to Briter Bridges. Round up the top five: Cleantech (15%), Logistics (12%), Mobility (8%), E-Commerce (5%).
Partek: FIntec remains Africa’s most funded sector across all capital sources, with 39% of total equity volume (down from 63% in 2021) and 45% of total debt volume. Other sectors experienced strong growth, capturing a significant share of equity fund activity this year. – 5 lists.
Big Deal: Fintech accounted for 37% of total funding raised in technology in Africa, compared to 53% in 2021, according to Data Tracker. Energy comes in by a wide margin at 18%. Logistics follows second at 13%, with retail, telecommunications, media, and entertainment comprising his second-most well-funded sectors.
Top Countries: The Big 4 Still Hotspots for VC Investments in Africa
Briter Bridges: Companies in the ‘Big 4’ (Nigeria, Kenya, Egypt and South Africa) captured 75% of all investments and deals. According to Briter Bridges, the top countries for investment include Nigeria (25.4%), Kenya (24.2%), Egypt (18.4%) and South Africa (10.9%). Ecosystems outside the top four include countries such as Ghana, Uganda, Tanzania, Morocco and Tunisia.
Partech: Nigeria accounts for 23% of total equity funding for African tech companies. South Africa was second with 17%, Egypt was third with 16% and Kenya was 15%. Outside the top four countries, startups in Ghana, Algeria, Tunisia and Senegal received the most funding.
Big deals: Nigeria outperforms African VC destinations with $1.2 billion. Kenya is a close second with her $1.1 billion, followed by Egypt with her $820 million and South Africa with her $555 million.
Women-led startups haven’t changed much
Briter Bridges: According to Tracker, 4.9% of funding raised by African startups last year came from all-women-founded teams. If these companies have more than one male co-founder, he increases that number to 9.7%.
Women-founded startups, including startups with at least one male co-founder, account for 13% of all equity funding, down 3% from 2021, according to Partech. However, in 2022 we will raise 22% of all deals, an increase of 2%. From 2021. The investment firm did not provide data only on startups founded by all women.
Big deals: Female-founded startups or gender-diverse teams received 13% of total African equity investment. Last year it was 18%. But on the more reassuring side, the percentage of all-female founded teams increased from 1% to 2.4%, which is still abysmal.
Other lessons learned from 2022 African venture capital performance
Dario Giuliani, Founder and Director of Briter Bridges, said that when looking at a 10-year timeframe, Africa’s tech ecosystem has always grown at a steady pace, and in this sense, we look at changes over the past few years. says that doing so is harmful. Some external phenomena such as COVID, post-COVID cash abundance and global market contraction.
He also noted that while all metrics grew, from the number of deals to exits, from new international investors to new local early-stage investors, the weight of mega deals to total funding and the fact that most of them It also claims the fact that it is from non-Africa in America. Concentrated investors are increasing their reliance on foreign capital. “But at the same time, it can open up opportunities for local funds to gain ground and close better deals,” he added.
Partech Africa general partner Tidjane Deme says more focus needs to be placed on how startups are starting to embrace debt financing. With 71 debt deals (65% year-on-year) he accounted for $1.55 billion (106% year-on-year), Partech said in its report that debt will become the asset class driving investment in 2022. It is said that it has confirmed that it is strengthening the influence of African technology ecosystem.
Cleantech and fintech start-ups are building sophisticated and sophisticated businesses, attracting a new generation of debt capital providers with creative structures. Examples include MFS Africa and Solarise Africa. However, the number of active debt investors on the African continent has increased 2.5 times over the last year — with a good mix of local debt institutions, international lenders with emerging market vehicles and development finance institutions (DFIs). — Deme believes the market needs more debt funds. Along with the likes of Symbiotics and Lendable, it provides ample capital for startups that are beginning to appreciate its importance.
“we [Partech] I don’t take on debt, but I sit on the board of a company that encouraged me to take on more debt. At some point it was too early to create a venture debt fund. Because the pool of startups that needed it wasn’t deep enough. “Because we need a large pool of startups to absorb that debt before we can see a local dedicated fleet,” he said. “But I expect more companies like this to come, or existing equity players to decide to create debt vehicles to complement what they have to offer.”