Sustained growth – digging in to a record year of African tech startup funding


Pandemic or no pandemic, Africa’s tech startup ecosystems are not to be removed from the growth path. While COVID-19 raged, African startups raised, with more startups raising more money from more investors than ever before in 2020.

That is according to the just-released African Tech Startups Funding Report 2020, open-sourced and made available to all, for free, by Disrupt Africa in partnership with Catalyst Fund, RTB House, Quona Capital, 4Di Capital, Villgro Africa, Lateral Capital, and Otundi Ventures.

The report, which was the first of its kind upon its inaugural publication in 2016 and is now on its sixth edition, tracks investment into the continent’s startup space, and highlights growth in funding for African tech ventures.

Sustained growth

That growth can be said to be sustained by an impressive 2020, which saw new records set. In all, 397 startups raised an impressive US$701,460,565 in total funding. Both of these figures represent significant increases on 2019 – the number of funded startups is up 27.7 per cent on 2019, and the funding total is 42.7 per cent higher.

In fact, the number of startups to secure funding has continuously increased each year since Disrupt Africa began publishing its annual funding report. In 2015, only 125 startups secured investment. This figure grew to 146 in 2016, 159 in 2017, 210 in 2018, and 311 in 2019. 

The total raised by these companies has also increased year-on-year for the past five years – with a decrease from US$185,785,500 in 2015 to US$129,113,200 in 2016 preventing the clean sweep. There has been steady growth ever since – in 2017, total funds raised were up 51 per cent at US$195,060,845. They increased by a further 71.5 per cent in 2018 to reach US$334,520,500, and in 2019 grew by another 46.7 per cent again US$491,623,400.

Growth across both these measures did slow slightly in 2020, most likely in response to the COVID-19 pandemic, but the African startup ecosystem has remained robust throughout the tribulations of 2020, at least from a funding perspective.

The average deal size is also on the rise, hitting US$1,766,903 in 2020, up 11.8 per cent on the year before. Standout rounds went to Egyptian e-health venture Vezeeta, Nigerian fintech Flutterwave, South African retail-tech startup Skynamo, Kenyan agri-tech company Twiga Foods, and Kenyan conservation tech solution Komaza.

Investors multiplying, and diversifying

The number of active investors on the continent is also on the rise. The report counted at least 370 active investors in 2020, up 42.8 per cent on 261 in 2019. That latter figure was in itself a 68.4 per cent rise on the 155 investors listed in 2018.

With a large range of institutional investors, VC firms, family offices and angels active in Africa, there is clearly an increasing confidence and interest in backing startups on the continent across all stages of the startup lifecycle.

The likes of Naspers and the International Finance Corporation (IFC) were active, South African banks made investments, the usual bunch of Series A stage VC firms – plus many more – had busy years, and early-stage funding is also on the rise. A host of new funds targeting startups at the pre-seed and seed stages launched in 2020, key among them Sherpa Ventures, Acuity Ventures and the Future Africa fund, the latter founded by Iyinoluwa Aboyeji of Andela and Flutterwave fame.

Meanwhile, seed fund Kepple Africa Ventures is probably the most active VC on the continent, having backed almost 40 startups in 2020 alone. Coupled with the growth in angel investing – and the increasing number of angel investor networks across Africa – it means there has never been a better time to seek funding as an early-stage startup on the continent.

Accelerator-linked investments are also common, with Flat6Labs, Y Combinator, Founders Factory Africa, 500 Startups and MEST Africa among the most prolific investors on the continent.

The COVID-19 shaped elephant in the room

All in all, then, 2020 was a great year from many perspectives. There is one potential spanner in the works, however, and it would be remiss not to address the COVID-19 shaped elephant in the room at this point. The fact more African tech startups managed to accumulate more funding than any year on record even while a global pandemic raged is a remarkable one, and the continent’s startup and investor communities deserve credit for this.

However, the true impact of COVID-19 on African tech startup funding may yet to be felt. The majority of the rounds that took place in 2020, especially those earlier in the year, would have been under discussion long before “COVID-19” was even a phrase in our collective vocabulary. Moreover, funds had been raised, LPs had written cheques, and capital, in most cases, was required to be disbursed. It may have ended up going into fewer startups than might otherwise have raised, at larger ticket sizes, as investors looked to minimise risk, but be invested it must.

Raising a new fund, in the current climate, is another thing entirely, and we have already heard stories of funds delaying fundraising or investment plans being put on hold. Corporate budgets are in flux, development institutions may prioritise aid over investment, and signing up LPs to your latest African fund given the risks that are inherent with relatively early-stage investments in emerging market businesses, may yet prove much more challenging in 2021. It is this that could yet have a negative impact on investment, and startups must await nervously developments for 2021.

But for now, raise a glass to the successes of 2020 – another record year for funding for African tech startups. 

For more information, or to download the report, please visit, or email Gabriella on [email protected], or Tom on [email protected].


About Author

Passionate about the vibrant tech startups scene in Africa, Tom can usually be found sniffing out the continent's most exciting new companies and entrepreneurs, funding rounds and any other developments within the growing ecosystem.

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