African Tech Funding Report: VC Funding Surges by 55% in 2022
13 min Read February 10, 2023 at 11:37 AM UTC
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VC funding in Africa surged by 55% to $3.3bn in 2022
- Investment in Africa’s tech startup ecosystem passed the $3 billion mark for the first time in 2022, with the space withstanding global economic headwinds to post a record year.
- This is according to the annual African Tech Startups Funding Report released by startup news and research portal Disrupt Africa.
- Though Nigeria and the rest of the “big four” remain clear leaders, there is still plenty of activity elsewhere on the continent, with startups backed in 27 African countries.
Source: Disrupt Africa
While the $3 billion figure falls short of other estimates of 2022 VC funding in Africa, the Disrupt Africa report tells the same story—one of an impressive 2022 in which African startups raised more funding than ever before, in spite of a global downturn in investments, especially in riskier asset classes such as venture capital. Per the report, up to 633 startups raised a combined $3.3 billion in 2022, an incredible 55.1% annual growth, while the number of funded startups increased by 12.2% on 564 in 2021.
Oikocredit partners with MyCredit to fund SMEs in Kenya
- Social impact investor Oikocredit approved a loan facility of $2.6 million to MyCredit, a non-bank financial institution based in Nairobi, Kenya.
- Through this partnership, MyCredit plans to support businesses and local communities to achieve greater financial freedom through tailor-made loans to small and medium enterprises (SMEs), professionals, and civil servants.
- The secured funding will support MyCredit’s strategic plan to offer affordable and medium-term financing of up to three years to its SME customers in trading businesses.
Access to credit remains out of reach of many Africans and is a significant barrier to the growth of many small businesses. The continent has an estimated trade finance gap of $81 billion. It’s also a problem investors are particularly keen to address as they get attractive returns as evident in MyCredit’s fundraising. The startup claims to have disbursed 15,500 loans to customers across Kenya with a total value of KES 6.08 billion (~$48 million) in the last six years.
Vantage reaches final close of 4th mezzanine fund at $377m
- Vantage Capital, one of Africa’s largest mezzanine fund managers, has announced the final close on its fourth mezzanine fund.
- A total of $377 million of commitments has been secured from a mix of European and US-based commercial investors, as well as a host of development finance institutions (DFIs) that include IFC, BII, SIFEM, DEG, Norfund, Swedfund, Finnfund, and EIB.
- As with its predecessor funds, Vantage plans to continue providing mid-sized African businesses with flexible capital to drive business expansion and support job creation.
Along with other kinds of investments such as FDI, FPI, venture capital, and impact investing, mezzanine financing—a hybrid of debt and equity financing that gives the lender the right to convert the debt to an equity interest in the company in case of default—is a growing phenomenon in Africa, led by firms like Vantage. The increasingly diversified capital pool available on the continent plays an important role in supporting the growth of mid-size businesses that would otherwise struggle to access capital from banks.
Egypt’s Gameball secures $3.5m to scale its CRM platform
- Egypt-based marketing CRM platform Gameball has closed a $3.5 million seed round led by 500 Global and a mix of Africa-focused, Middle Eastern funds and regional angel investors.
- Founded in 2020, Gameball is a customer intelligence and marketing CRM platform that helps consumer brands create personalized engagement with customers and monetize their customer base.
- Gameball plans to use the funds to accelerate product commercialization, accelerate enterprise customer acquisition, and strategic hiring.
The customer relationship management (CRM) market has grown in the last few years and is expected to see a 12.5% compound annual growth rate, reaching $145.79 billion value in the next six years. This growth is largely attributable to the uptick of online merchants using CRM tools to boost sales, increase profits, and beat mounting competition from other providers. In Africa, Gameball is one player that offers consumer brands this service and claims to have served over 7,000 businesses reaching 20 million customers since its launch.
Morocco-based Chari raises $1m from Orange Ventures
- Chari, a Morocco-based B2B e-commerce startup also with embedded financing services for the FMCG sector, has raised $1 million from Orange Ventures.
- As per the transaction, Grégoire de Padirac, partner of Orange Ventures Middle East and Africa, is set to join Chari’s supervisory board.
- Founded in 2020 by Ismael Belkhayat and Sophia Alj, Chari lets retailers purchase large quantities of inventory items directly from suppliers and the platform has onboarded over 20,000 food businesses in Morocco.
African markets, though diverse, have some common themes, one of which is the largely fragmented FMCG space. Often, both local and multinational manufacturers do not have visibility and control over their own distribution channels while distributors have to deal with discrepancies in prices and inefficient logistics. Chari, like many startups in the B2B e-commerce space in Africa such as Nigeria’s TradeDepot and Egypt’s Capiter, has built digital products to address these bottlenecks in the crucial sector.
Partech fund closes at $263m to invest in African startups
- Partech, the global VC firm with several funds, has reached the first close of Partech Africa II at $263 million, making it the largest Africa-focused fund yet.
- The firm, which focuses on early- and growth-stage startups across the continent, intended to raise about €230 million (~$250 million) for its second African fund and reach a first close at €150 million.
- However, overwhelming interest from LPs meant Partech Africa II surpassed what was initially set for the entire fund at first close. The African fund will now seek to reach a final close of not more than $300 million.
Partech Africa II further signals a strong investor appetite for opportunities in emerging markets, especially Africa. It is one of three funds the VC firm has launched in the last two years (after a $750m growth fund and a $100m seed fund). It also follows Partech Africa I, the first fund announced in 2018 and closed at $143 million. VC activity in Africa has increased greatly between then and now. Last year, startups raised $6.5 billion compared to $1.16 billion in 2018, reflecting how far the ecosystem has come, and Partech’s new fund corresponds to that growth.
Nigerian digital bank Umba launches operations in Kenya
- Umba, a digital bank for emerging markets based in Nigeria, has launched operations in Kenya as it begins to expand across the continent.
- The startup aims to make it easier for consumers and SMEs to interact with banks and mobile money networks through its low-fee service.
- After acquiring a majority shareholding in Daraja Microfinance Bank, Umba can now offer full banking services in Kenya, including current accounts insured by the Kenya Deposit Insurance Corporation (KDIC), interest-bearing savings accounts, fixed deposit accounts, lending, and payments.
Source: Disrupt Africa
Over the past few years, the digital banking wave has taken shape in Africa as startups—foreign and local—capitalize on the continent’s limited banking access, providing its people with platforms to access financial services. The need is glaring: Africa is the second-most-populous continent in the world, with around 1.3 billion people, yet only about half of the population has access to a bank account due to enduring infrastructure problems. The demographics of the African market thus offer a huge opportunity for fintech startups like Umba.
Moroccan agritech Sand to Green raises $1m seed round
- Morocco-based agritech Sand-to-Green has raised a $1 million seed funding round from Norwegian Katapult and pre-seed fund Catalyst.
- Founded in 2021 by Benjamin Rombaut, Sand to Green provides a long-term solution to the problems of desertification, land degradation, and food security.
- The new funds intend to expedite Sand to Green’s operational development in order to prepare for the large-scale deployment of its Moroccan and African projects.
Sand to Green is one of a handful of innovative agritech startups that have sprung up across Africa, and are finding business opportunities in addressing the continent’s many agricultural issues. But there’s a gap in funding available to the sector compared to peers such as fintech or commerce, which underscores the importance of fundraising like this. More so, the global agritech sector is expected to reach nearly $200 billion by 2025 and Africa can only be well-positioned to play a vital role in advancing this market with adequate funding.
Egyptian health startup Yodawy raises $16m Series B
- Egypt-based Yodawy has raised $16 million in the first close of its Series B round, bringing the total amount raised to date to $24.5 million.
- Founded in 2018, the startup offers a marketplace where patients can process prescriptions and place online orders for medicines and also connects patients to medical labs and insurance companies.
- Yodawy plans to use the fresh funding to drive the growth of its signature Care Programme for chronic patients, continue to automate its operations as well as support its regional expansion strategy.
The Middle East and Africa’s pharma market is said to be worth around $100 billion and across the continent, e-pharmacy providers are springing up to serve businesses and individual customers. These include PharmacyMarts, Chefaa, Vezeeta, mPharma, Lifestores, and Drugstoc. Yodawy, however, aims to build an all-inclusive pharma value chain in the region and claims to have processed over four million prescriptions, as well as partnered with 20 health insurance companies, 3,000 pharmacies, and over 300 corporates in Egypt since its Series A round.
Flutterwave enters North Africa with Egypt licenses
- Flutterwave, a Nigeria-born pan-African payments tech giant, has received Payment Services Provider and Payments Facilitator licenses in Egypt, allowing it to operate as an official payment service provider in the country.
- Flutterwave facilitates cross-border transactions in multiple currencies and the new licenses mean it can support international businesses entering or growing their operations in the Egyptian market.
- The fintech unicorn and Africa’s most valuable startup becomes one of the few payment service providers in Egypt with both local and global settlement capabilities.
Flutterwave, valued at more than $3 billion, is one of the most funded startups operating in Africa with $475 million raised in six years. In addition to being the continent’s largest startup, it is perhaps the biggest within the online payments space. Currently, Flutterwave has an infrastructure reach across 34 countries on the continent with over 900,000 businesses globally using its solution to process payments in 150 currencies and across different payment modes.
Starlink races to gain internet market share in Africa
- Elon Musk’s Starlink plans to launch its internet service in more than 20 markets across Africa, in a race to gain internet market share unserved by existing telcos.
- Starlink provides Internet services using low-orbiting satellites. This means that it is delivering Internet connection employing the same technology used by satellite TV companies, like DStv, for example, to deliver broadband Internet.
- The SpaceX-owned service has already launched commercial operations in Africa, debuting in Nigeria this month, and has also received regulatory approval to launch in Rwanda.
Source: CNBC Africa
The World Bank estimates that only 29% of people in sub-Saharan Africa had access to the internet in 2020. Whereas it is often uneconomical to lay cables or build telecom towers in remote parts of Africa, satellite internet providers can cover these areas at no extra cost after serving their main customers. Hence, Starlink’s promise of high-speed and low-latency connectivity could provide a big boost to the region’s economic activity. But the obvious drawback is the cost for users; pricing will determine to what extent Starlink can penetrate Africa.
OPEC Fund backs AFC’s infrastructure funding with $50m
- The OPEC Fund for International Development and Africa Finance Corporation (AFC) this week signed a $50 million loan agreement to finance the development of infrastructure critical to economic growth and job creation across Africa.
- The facility doubles the OPEC Fund’s commitment to AFC following an initial $50 million 10-year loan provided in January 2021 and builds on collaboration initiated through a cooperation agreement in 2017.
- Proceeds of the 10-year funding will be used to improve connectivity, transport, logistics, and trade and to boost access to energy across the African continent.
Africa presents a massive infrastructure investment opportunity with a current investment gap of over $150 billion per year. The continent is home to some of the fastest-growing economies in the world, with a combined GDP of $2.3 trillion and a population of 1.3 billion people. But only 60% of the population has access to basic electricity, among other infrastructure challenges. With funds like the AFC initiatives and a growing middle class, Africa’s infrastructure market is poised for substantial growth in the coming years.
South Africa’s Sendmarc nabs $7m Series A funding
- Sendmarc, a Johannesburg-based startup offering individuals and businesses protection from cyber-attacks and general email impersonation to global clients, has raised $7 million in Series A funding.
- The startup was launched by Sam Hutchinson, Keith Thompson, and Sacha Matulovich in 2020 after selling their former startup: a communication platform that allowed businesses to send, deliver and track email and SMS communications.
- The South African startup, which has offices in the Netherlands, Argentina, and Canada, intends to use the investment to increase its sales team across Africa, the U.S., Europe, and Latin America.
Globally, businesses lose up to $1 trillion annually to cybercrime; in Africa, that figure stands at a whopping $4 billion. As digital services, financial and non-financial, providers penetrate the African and global market at large, services like Sendmarc’s are crucial to helping businesses make the internet safer for their operations and customers. The startup claims to have over 1,000 paying customers so far; 80% of them are in South Africa and the rest are spread globally.
Untapped Global launches climate initiative for Africa
- Untapped Global, an investment company focused on emerging markets, has launched its Climate Action Initiative with the support of a growing consortium of partners to deepen EV adoption in Africa.
- The company provides smart asset financing to businesses and has a network of mobility partners that manage over 30,000 vehicles across a half dozen countries.
- Through its new initiative, Untapped aims to achieve 25% electric vehicle adoption across its mobility partners by 2025, deploying over 10,000 EVs, and displacing an estimated 240 metric tonnes of CO2 per year.
Africa sees huge impacts of climate change, despite accounting for only a fraction of the current level of global CO2 emissions in the atmosphere. Still, there’s a need for the continent to join in an ongoing effort to transition to greener energy, and for investors, nowhere promises bigger business opportunities than in Africa given the need to reinvent all sectors. Untapped’s initiative should help drive forward the adoption of EVs in the region, which is gaining momentum through the efforts of startups like BasiGo.
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