The year 2015 saw a mere $277 million of venture capital deployed in Africa, the world’s second-most populous continent. By contrast, Snapchat alone raked in $500 million in a single funding round that year.
But the times, they are a-changin’. After a pandemic-driven lull, startup funding in Africa is roaring back, expected this year to reach as much as ten times the 2015 haul, according to a new report.
Africa’s nascent startup scene can trace its origins to Kenya circa 2007. Telecom giant Safaricom launched a mobile money service that extended purchasing power to millions on the continent with a cell phone at hand, but no retail bank within reach.
But that was just the beginning. Africa is now home to more than half the world’s 310 mobile money services and saw $490 billion in mobile transactions last year. And funding for startups in the continent’s flourishing fintech economy has since reached new heights:
- In 2019, VC investments in Africa climbed to a record $2 billion across 250 equity rounds, a 74% increase from the less than $1.2 billion seen in 2018.
- Though the pandemic stalled investment at $1.4 billion last year, analysts at Cape Town-based accelerator AfricArena estimate funding totals between $2.25 billion and $2.8 billion for 2021.
“We expect an extremely strong acceleration of deals from seed to Series B as well as major growth deals, together with some IPOs (Nigeria’s Interswitch, for example), that will propel deal activity to never seen before levels,” wrote the analysts.
Mature Deals Needed: While deal activity is blossoming and solar startups like Greenlight Planet and Lumos Global have joined African fintechs with hefty hauls, securing big, late-stage capital is still scarce. Only two African startups, fintechs Flutterwave and TymeBank, have ever raised more than $100 million in a single round.