2020 was a record year for investment into the African tech startup ecosystem, with more startups raising more money, from more investors, than ever before.
This is according to the sixth edition of the annual African Tech Startups Funding Report 2020 released by startup news and research portal Disrupt Africa, which is for the first time available free to all as part of an open-sourcing initiative in partnership with Catalyst Fund, RTB House, Quona Capital, 4Di Capital, Villgro Africa, Lateral Capital, and Otundi Ventures.
The report finds that new funding records were set over the course of 2020, as 397 startups raised an impressive US$701.5 million in total funding. Both these figures are up substantially on the previous year, with the number of funded startups increasing 27.7 per cent on 2019, and the funding total growing by 42.7 per cent.
Though growth has slowed a little, the numbers represent impressive growth on 2019 in spite of the COVID-19 pandemic, and mean the African tech startup ecosystem continues on its positive trajectory from a funding perspective.
This year’s edition of the report also counts at least 370 active investors, marking 42.8 per cent growth on the previous year, when the data tracked 261 investors. This figure was in itself a 68.4 per cent rise on the 155 investors we found in 2018.
Kenya, Nigeria, South Africa and Egypt remain emphatically Africa’s “big four” from a funding perspective, accounting for 77 per cent of funded startups and 89.2 per cent of total investment. Nigeria (85), Egypt (82) and South Africa (81) lead the way from a ventures perspective, but when it comes to total combined raised capital it is Kenya that is Africa’s leader, with startups from the East African country raising over US$190 million in funding in 2020.
Though these markets remain clear leaders, there are signs of growing activity elsewhere on the continent, with startups backed in 24 African countries, up from 19 in 2019, 20 in 2018, and 18 in 2017.
The financial technology sector was, yet again, the most attractive to investors in 2020, with more startups securing funding than any other sector and a combined total that dwarfed all others.
In all, 99 fintech startups raised investment over the course of the year, representing 24.9 per cent of the overall total, while the combined amount raised by fintech companies over the course of the year jumped 49.3 per cent to US$160,319,065.
However, growth in fintech investment is slowing to some extent, and other sectors also had impressive years – notably e-commerce and retail-tech, e-health, logistics, energy, recruitment and HR, transport, and agri-tech.
The report is available for free download here. Aside from providing a full list of the funded startups, who invested in them, and, where possible, the amount raised, from the previous year, the annual reports also provide deep-dives into investment trends within key startup geographies and verticals, as well as data on African startup acquisitions.
“The growth in funding seen across the continent’s tech ecosystems in 2020 is extremely strong, and all the more impressive given the circumstances of the year given COVID-19 and its many implications. As African startup funding passes the $700 million mark for the first time, and more investors pump more money into more markets than ever before, there are no signs of the sector slowing down,” said Gabriella Mulligan, co-founder of Disrupt Africa.
“At Disrupt Africa we’ve been tracking investment into the African startup ecosystem for six years now, and it is exciting to see our work and the work of so many others within the ecosystem validated by significant increases in the amount of investment that is available to founders on the continent. This year’s edition of our funding report is especially exciting for us as for the first time we are able to give it away for free to anyone to whom it could be of benefit, and for that we are extremely grateful to our many partners,” said Tom Jackson, co-founder of Disrupt Africa.
Previously available for sale, the African Tech Startups Funding Report has been purchased each year by leading tech companies from Africa and the rest of the world, Big Four consulting firms, banking and fintech leaders, venture capital firms, supranational investors and international trade bodies. This year, however, Disrupt Africa is making the next edition open source for the first time, to make it accessible to those for whom the information is most valuable – African entrepreneurs.
It has done this with the help of partners Catalyst Fund, RTB House, Quona Capital, 4Di Capital, Villgro Africa, Lateral Capital, and Otundi Ventures, with whose support Disrupt Africa will be distributing the African Tech Startups Funding Report 2020 to as many ecosystem stakeholders as possible.
“Working closely with early-stage fintech funders across emerging markets, we are constantly reminded that access to the right funding at the right time is crucial for early-stage fintech startups in their journey toward product-market fit and scale. Catalyst Fund is excited to partner with Disrupt Africa on this annual funding report, to provide access to valuable data that can highlight opportunities for startups, as well as critical gaps in the market, and better support the innovation ecosystem in Africa,” said Maelis Carraro, director, Catalyst Fund, at BFA Global.
“We’ve partnered with Disrupt Africa because for years they have been consistently delivering valuable stories and insights from the tech sector on the continent. We are happy to contribute to this edition of the report, so even more data is available to everyone, for free. This way every founder and investor can make informed decisions and push the growth of investments even further,” said Marek Zmysłowski, general manager for Africa at RTB House.
“We are excited about this partnership with the team at Disrupt Africa, which will go a long way toward ensuring that vital data on where investment in tech startups in Africa is coming from and going to will be available to all. As the African tech ecosystem continues to grow, the availability of reliable data is crucial – and this initiative means better information is accessible to all entrepreneurs and aspiring entrepreneurs, regardless of their location or means, said Johan Bosini, partner, Quona Capital.
“We are excited to partner with Disrupt Africa on this initiative. For us, the report is an important snapshot illustrating key trends and metrics with regards to the African startup ecosystem. Tom, Gabriella and the team are at the forefront and hence perfectly positioned to publish a true and accurate reflection as to where we are headed as an industry,” said Anton Van Vlaanderen, partner at 4Di Capital.
“Any startup enabler or ecosystem actor is as strong as the entrepreneurial ecosystem they operate in. Villgro Africa has partnered with Disrupt Africa because we are passionate about democratisation of transactions happening across the continent which will then lead to better deal flow and even more vibrant ecosystems, especially in geographies that have been under-represented over the years. As Villgro scales its model across Africa, these investment insights and analytics will come in handy,” said Wilfred Njagi, co-founder and chief executive officer (CEO) of Villgro Africa.
“We appreciate the fundamental importance of data and equal access in building the ecosystem. Democratising it and reducing its scarcity, especially in Africa, is the responsibility of everyone,” said Steven Grin, managing partner of Lateral Capital.
Nnena Nkongho, principal at Otundi Ventures, said timely and accurate data around investing activity in the growing, African venture capital ecosystem was important.
“It helps inform all stakeholders – founders, investors, advisors – in their assessments of both risks and opportunities, stimulating further action. We’re happy to have partnered with Disrupt Africa in helping to broaden access to this information so that more people can participate in an engine for economic transformation of the African continent,” she said.