Venture Capital deals pumped more money into Africa in 2021 than the preceding seven years combined, breaking all sorts of records.
650 Venture Capital (VC) deals raising $5.2 billion in total, recorded during 2021, marking a 104% increase from the 319 reported in 2020. This reflects a welcome maturation in Africa’s entrepreneurial space. The number of VC deals recorded last year alone correspond to 70% of total VC deals recorded on the continent between 2014 and 2020, and 41% for the period 2014 to 2021.
261 Unique companies were backed by at least one impact investor, 75% of investors active in Africa in 2021 were international and 25% were Africa-based. Africa is one of the fastest growing VC markets globally and according to the African Private Venture Capital Association (APVCA) this trend shows no sign of slowing down any time soon.
In their latest Venture Capital in Africa report, APVCA say while each investment stage witnessed annual growth, late-stage deals saw triple digit acceleration. West Africa was the regional winner, pushed largely by significant deal activity in Nigeria.
Governments across Africa really stepped up their policy legislative game around entrepreneurship in 2021 with a wave of FinTech related regulation. Egypt introduced legislation allowing their Central Bank to allocate banking licenses to Fintech and digital commerce firms, a first for them.
Kenya’s Capital Markets Authority instituted a Regulatory Sandbox Platform to which they admitted nine FinTech startups to live test their products and services in a controlled environment, free from the constraints of existing regulation.
Uganda’s Capital Markets Authority partnered with the European Union and FSD Uganda to establish the Deal Flow Facility. This technical assistance/match-making initiative is meant to address the gap emerging businesses in Uganda face when trying to access growth capital.
South Africa’s government introduced a startup visa programme to stimulate private sector growth. The proposed initiative would enable entrepreneurs to live and start a business in the country, potentially attracting high-impact investors and entrepreneurs to its shores.
The Nigeria Startup Bill was approved by the country’s Executive and is now pending Parliamentary approval. Co-created as a joint initiative between Nigeria’s tech ecosystem and the Presidency this law shows a way to create an enabling regulatory environment from the bottom up. “Nigeria’s example paves the way for other Regulators across the continent endeavouring to keep up with the momentum of the ecosystem’s expansion, to ensure legislation is enabling, adaptive and inclusive,” reads the report.
Financials was the most active sector by volume (32%) and attracted the largest share of deal value at 60%. Africa tech really hauled out all the stops in 2021. 81% of VC deals done in 2021 in Africa were either in technology or technology-enabled companies operating across variety of sectors.
“Africa’s tech ecosystem continues to thrive, with an increasing number of African entrepreneurs starting and scaling tech-enabled solutions to the continent’s most pressing challenges.
“Harnessing disruptive technology has become a mainstream practice in Africa’s early-stage ecosystem. Digital tools are becoming increasingly integrated in the formulation of business models, bring much needed products and services to largely underserved markets,” reads the report.
APVCA sees the FinTech sector dominating VC deal share in the long term, but points out technological innovation is not solely limited to this sector. E-Commerce and HealthTech also saw significant growth, as did Mobility Tech.
“2021 Saw a proliferation of startups offering practical yet innovative solutions address urban mobility challenges in Africa’s cities. Startups such as Kenya’s electric vehicle ride hailing company NopeaRide. Togo’s transport technology platform Gozem and Nigeria’s motorcycle-taxi app Max.neg all leverage technology to improve the accessibility and affordability of mobility services, and each raised funding in 2021,” reads the report.
15 companies concluded deals valued at more than $100 million in 2021 – 13 in financials, 2 in industrials and one in the consumer discretionary sector. Five of the super-sized deals were in companies head-quartered in the US (Chipper Cash, Tala, Andela, Zipline International); three in Nigeria (Palmpay, TradeDepot and OPay); two in South Africa (MFS Africa and Tyme Bank); one in Senegal (Wave Mobile Money); one in Egypt (MNT-Halan) and one in Britain (Zepz).
The first nine month of 2021 saw a record number of African startups reach valuation of more than a billion dollars. Five-supersized deals in 2021 saw companies reach for unicorn status. With the exception of Andela, they were all in the fintech sector. Egypt’s ride-hailing start up Swvl and Nigeria’s digital bank startup Kuda could reach unicorn status by 2023.
With the exception of MFS Africa whose $100m series C investment was led by AfricInvest and MNT-Halan whose $120m fundraised was led by Africa-focused fund manager Development Partners International, the other super-sized deals that took place in Africa in 2021 were led by International PE and VC fund managers from the US, Japan, Singapore and the UK. ESI
APVCA’s Venture Capital in Africa report is available online.
Alternative funding mechanisms will be discussed at Enlit Africa
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