African start-ups attract US$1B in funding in under two months

AFRICA – African start-ups are breaking records year after year, reaching US$1 billion in funds this year in under two months.

The new record trumps the US$1 billion raised within 21 weeks in 2021, and the previous US$1 billion in 36 weeks in 2020, The Big Deal reported.

The increased funding in African start-ups has been reflected in the number of firms reaching the US$1 billion valuation mark, to become unicorns during the pandemic.

In the span of seven weeks, two African start-ups locked mega-deals of over US$100 million each.

Tunisia’s AI startup InstaDeep made headlines in late January after locking US$100 million in investment funds from venture capital fund, AI Capital, pharmaceutical giant BioNTech, and Google.

The second startup to lock a mega funding deal is Nigeria’s fintech startup Flutterwave. Last week, the startup became Africa’s most valuable startup with the new ground-breaking US$250 million addition to its capital.

Both Flutterwave and InstaDeep’s combined funds in 2022 make up only a third of the US$1 billion raised by African start-ups, The Big Deal noted.

Start-ups belonging to the ‘“Big Four” countries, Nigeria, South Africa, Kenya, and Egypt have locked 76% of the investment funds and 78% of the deals.

In 2021, African Fintech start-ups raised a total of US$2.3 billion, more than double the funding raised by start-ups in other sectors combined.

According to Briter Bridges, 62% of total funding in African start-ups went to fintech start-ups, double the 31% recorded in 2020.

Healthtech and Biotech follow closely at 8%, with logistics (7%), education (5%), and cleantech (5%) rounding up the top five sectors by investment value.

With 37% of all the investment volume going to Nigerian start-ups, the West African country is once again topping the list of countries in terms of investment.

Given this impressive 2022 start, many experts expect African start-ups to raise $7.3 billion in funding by the end of the year.

Successes in African tech may have previously been limited to certain countries and sectors but steady growth across the board has meant that more companies are coming through.

With the steady rise in funding assumed to be maintained, African startup funding is projected to reach US$93.9 billion by 2030.

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