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VC funding for African tech start-ups increase by 74% YoY

Anna Lyudvig
Jan. 30, 2020, 2:05 p.m.
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In 2019, 243 African tech start-ups raised a total of $2.02bn in equity through 250 rounds, representing a 74% growth year-on-year, according to Partech Africa.

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In 2019, 243 African tech start-ups raised a total of $2.02bn in equity through 250 rounds, representing a 74% growth year-on-year, according to Partech Africa.

The yearly funding amount continues its exponential growth, having expanded by 5.5x over the last 36 months.

This is according to Partech Africa’s annual report on African tech start-ups, which covers equity deals in tech and digital spaces, and funding rounds higher than $200k.

Cyril Collon, General Partner at Partech, said: “Africa's tech ecosystem has moved into the mainstream, transforming economies considerably, and while there are certain ups and downs to be expected in the future, this new reality is also redefining the scope of Private Equity on the continent, with Venture Capital on the way to becoming the number one asset class in Africa.”

The Partech Africa report tracked 250 rounds raised by 234 start-ups compared to 164 rounds by 146 start-ups the year before, representing +52% growth year-on-year in deal count.

“We noticed a massive densification of early stage rounds with 206 transactions (+57% year-on-year) in Seed and Series A investments, which confirms investors’ confidence in taking early bets in Africa,” said Collon.

Talking about investors, 70 of them made two or more transactions in 2019, compared with 20 investors only back in 2017.

The Top 5 most active investors have each done more than seven deals.

According to the findings, Nigeria attracted a record high of $747m in tech VC investment (37% of all funding), but only takes 4th place behind Egypt in deal count.

Meanwhile Egypt breaks into the top three countries both in terms of deal count (+147% year-on-year) and deal volume (+215% year-on-year).

The regional landscape has now been redrawn with 85% of the total funding ($1.7bn) going to the top four countries: Nigeria, Kenya, Egypt and South Africa.

There were 18 countries with at least one equity tech deal above $200k in 2019, compared to 19 countries in 2018.

With total funding of $294m (+53%) raised over 47 deals (+24% year-on-year), the rest of the continent (i.e. excluding the top four countries) is absorbing 15% of total investment across the continent.

Regarding French-speaking Africa, Senegal confirms again its position as the leading hub with $16m raised in six deals.

As to the sector breakdown, driven by fintech, financial inclusion remains the main investment sector in the continent, attracting 54.5% of the total funding.

However, the online and mobile consumer services sector has witnessed a steep increase to 29.3% of total funding (vs 19.6% in 2018) while B2B and tech adoption represents this year only 16.1% of total deals (vs 30.4% in 2018).

Tidjane Dème, General Partner at Partech, said: “Fintech is clearly exploding on the continent with more and more digital players enabling startups to serve the segment.  This is one of the reasons that VC investors now have a much larger pool to play with than the traditional private equity investors did before.”

“We’re seeing the latter come in into smaller tickets and into the tech space, trying to find interesting opportunities,” he added.

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