It's a blockbuster funding year for African startups
By Conrad Onyango, bird
Africa is on track for its biggest startup fundraising year ever. With more African startups joining the "unicorn club", that's a trend that looks likely to continue.
African startups raised over a billion US dollars in a single quarter - and that trend is expected to be sustained for the rest of the year, data from Digest Africa's Africa Funding Report shows.
The continent had already raised 2.7 billion dollars by October, surpassing the 1.8 billion dollars raised in 2019, making 2021 the best year ever when it comes to fundraising by startups.
“We are on track for a blockbuster funding year,” said Digest Africa in its Q3 2021 Africa Funding Report: Record Funding Trend Explodes.
With 512 deals in. the first three quarters of the year, the report shows that startups are recording more high-value funding rounds. At the same time, the continent looks set to break the record 627 deals signed two years ago.
A boom in fundraising was recorded in the third quarter, with startups raising 1.2 billion dollars in the 10 biggest funding rounds of the year.
“Before Q3 of 2021, no single quarter had seen 1 billion dollars in funding,” says the report.
In 2020, during the pandemic, startups raised only 862 million dollars for the full year.
Four Nigerian and two Egyptian startups received the bulk of the funds raised during the record-breaking 2021 third quarter, while two startups in Tanzania and one each in South Africa and Senegal benefitted from the fundraising streak.
In August, a Nigerian fintech startup, Opay, broke the African startup fundraising record by raising 400 million US dollars in a Series C fundraise, making it the continent’s seventh unicorn (a startup with a valuation of over 1 billion US dollars).
A 200 million US dollars Series A fundraising by Wave in September valued the Senegalese mobile money provider at 1.7 billion US dollars, giving birth to Francophone Africa's first unicorn. The startup was acquired by global payments firm, World Remit in a 500 million US dollar stock-and-cash deal.
Another 200 million US dollars was raised in September by Andela, a startup that helps tech companies build remote engineering teams, in a Series E funding that valued the startup at 1.5 billion US dollars.
SWVL, an Egyptian mobility startup, became Africa’s 6th unicorn in July, following an announcement that it was going public via a merger with a SPAC (special purpose acquisition company) - Queen’s Gambit Growth Capital - in a deal valued at 1.5 billion dollars.
Between July and September, 143 deals were recorded, with an average 10 million US dollars raised in each deal. Africa’s big four tech startup ecosystems- Nigeria, Egypt, Kenya, and South Africa - accounted for 77 percent of the deals.
The majority of the deals were recorded in Nigeria (46) followed by Egypt (29), while South Africa and Kenya had 24 and 12 deals respectively.
The fintech sector received the most funding, raising 906 million dollars in the third quarter of 2021, while also leading the charge in the first and second quarters.
The 906 million dollars was more than the amount raised by all sectors combined in the entire first half of 2021, the report said, highlighting the size of the blowout third quarter.
Commercial and Professional Services raised 200 million US dollars, eCommerce and Retail raised 140 million US dollars and Transport and Logistics raised 124 million US dollars.
The authors of the report see brighter prospects in growth fundraising into the last quarter of the year, which is likely to set a new benchmark in capital raising for the continent’s startup ecosystem.
“The 3 billion (US) dollar mark will be crossed for the first time, but if Q4 matches or surpasses Q3, then 4 billion (US) dollars might be the next target. This will smash all expectations and estimates,” said the report.