Despite global slowdown, African startups raised about $5 billion last year

2023-05-14 22:14:40
Despite global slowdown, African startups raised about $5 billion last year

Despite startups around the globe recording a significant decline in funding in 2022, Africa continued its upward trend with $4.8bn raised by the end of December.

The struggling global economy has affected global startup funding badly, with a noticeable year-on-year decline of 55% in Q3 2022 compared to Q3 2021.

However, African startups managed to sustain their upwards trend as they accumulated more than $4.85bn by the end of December, a 4.75% increase from the same period last year.

Max Cuvellier, the co-founder of startup database Africa The Big Deal, said that 2022 funding will eventually exceed $5bn given that December 31st roundups are always underestimated.

Although the growth is not as astonishing as in previous years – from 2020 to 2021, investment grew by 120% – 2022 is still another record-breaking year for the continent in terms of the amount raised, number of deals and number of investors.

The “Big Four” – Nigeria, Kenya, Egypt, and South Africa – remain preferred destinations for investors, with all exceeding $500m in funds raised in 2022.

Ghanaian, Algerian, Tunisian, and Senegalese startups have seen a sudden rise in funding, attracting $390m, $151m, $119m, and $112m respectively.

West African startups lead the regional picture, accounting for $1.8bn in funding, although Nigerian startups represent almost 70% of it.

Eastern and Northern Africa follow closely, with $1.2bn and $1.1bn respectively, while Southern and Central Africa lag, accounting for only 12.5% ($600m) and 1% ($50m) of the continent’s total funding in 2022.

Fintech is the leading sector in Africa, accounting for 37% of total funding and more than 40% of funds received by three of the Big Four.

Kenya received far more investment in the energy sector than in fintech, with a major contributor being the solar system provider startup Sun King, which concluded Africa’s largest 2022 deal at $260m last April in a Series-D funding led by General Atlantic’s BeyondNetZero and M&G Investments.

Another popular sector is logistics and transport, which has been boosted by the multiplication of ride-hailing and food delivery startups such as Yassir – an Algerian on-demand service app founded by Silicon Valley-trained Noureddine Tayebi – which raised $150m in a Series B funding last November.

Source: African Business


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