African tech startup funding trebles to pass $2bn mark in 2021

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Investment into the African tech startup ecosystem trebled over the course of a record-breaking 2021 that saw total funding pass the US$2 billion mark for the first time.

This is according to the seventh edition of the annual African Tech Startups Funding Report released by startup news and research portal Disrupt Africa, which is available free to all as part of an open-sourcing initiative in partnership with Novastar Ventures, MFS Africa, Quona Capital, 4Di Capital, MEST Africa and Future Africa.

The report tells the story of an extraordinary 2021 in which more startups raised more funding than ever before, by quite some way. In all, 564 startups raised a combined US$2,148,517,500 in 2021. This represented incredible growth. The number of funded startups grew by 42.1 per cent on 397 in 2020, and the funding total was more than treble – up 206.3 per cent – the US$701,460,565 banked the previous year. 

In all, the number of African startups securing investment has increased by 351.2 per cent since 2015. Though growth had slowed a little in 2020, partly due to the impact of the COVID-19 pandemic, investors doubled down in 2021, with the number of different investors increasing by more than 100 per cent to 771 from 370 the previous year.

Nigeria, Egypt, South Africa and Kenya remain Africa’s “big four” from a funding perspective, securing a greater share of total funding between them than in 2020, yet Nigeria soared past all other countries to take top spot, with 161 startups raising a huge combined total of more than US$900 million.

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 24 African countries.

The fintech 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. The sector broke the US$1 billion funding barrier, something the African tech space as a whole only managed for the first time in 2021, with fintech accounting for almost half of total investment.

Other sectors also had impressive years – notably e-commerce and retail-tech, e-health, logistics, ed-tech, energy, agri-tech and transport.

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.

“Momentum has been building in the African tech space for quite some time now, and 2021 will be remembered as a watershed year. Breaking not just the US$1 billion but the US$2 billion mark, creating more unicorns, and about doubling the number of active investors – it was a very good 12 months indeed. It is still just a beginning, however, and there is plenty of room for more growth,” said Disrupt Africa co-founder Gabriella Mulligan.

Previously available for sale, the African Tech Startups Funding Report was until the last edition 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. Now, however, Disrupt Africa releases the publication for free, making it accessible to those for whom the information is most valuable – African entrepreneurs. 

This year it is doing this with the help of partners Novastar Ventures, MFS Africa, Quona Capital, 4Di Capital, MEST Africa and Future Africa, with whose support Disrupt Africa will be distributing the African Tech Startups Funding Report 2021 to as many ecosystem stakeholders as possible.

“For too long access to crucial industry data such as this has been out of reach for active or aspiring entrepreneurs, as they are usually priced out of access,” said Disrupt Africa co-founder Tom Jackson. “It is the Disrupt Africa ethos to make as much information freely accessible as possible, and we can’t thank our partners enough for helping us with the open-sourcing of this publication.”

“We have been investing in startups on the continent since 2014 and are encouraged by the tremendous growth of the venture ecosystem since then. Nevertheless, as startups move from proof-of-concept to scale, capital remains scarce. Disrupt Africa’s annual funding report is a critical resource for founders as they climb and navigate a capital ladder that still has missing rungs. We are delighted to partner with the team at Disrupt Africa to ensure their research is accessible to all entrepreneurs. The data and insights in the report are a vital resource, not just for charting the development of the venture ecosystem in Africa, but for supporting it,” said Steve Beck, managing director at Novastar Ventures. 

MFS Africa founder and CEO Dare Okoudjou said the African tech ecosystem had experienced unprecedented growth, breaking records year after year. 

“It’s the clearest indicator that we are reaching an exciting inflection point in our sector. In the last quarter of 2021, we raised US$100 million in Series funding to accelerate our growth as we make borders matter less. As such we understand the importance of the right funding to build the fundamental infrastructure needed to facilitate interoperability across payment schemes, borders, and currencies. Accurate and informative reports about the ecosystem raise the profile of our sector beyond Africa, and that interest helps to channel much-needed investments in impactful startups. We are absolutely thrilled to support Disrupt Africa on this important project,” he said.

“Quona Capital is proud to support this important work by Disrupt Africa,” said Johan Bosini, partner at Quona Capital. “We are seeing such incredible traction on many fronts of the venture ecosystem in Africa, with major milestones being achieved in large investment rounds and total quantum being invested in technology businesses across the major hubs in South Africa, Nigeria, Kenya and Egypt. We all learn and benefit from this industry data, and we are delighted to be part of this important initiative.” 

“Once again we are very happy to support this crucial initiative. It is publications like this that help all members of the African ecosystem to get a snapshot as to how and where the industry is moving, and therefore vital to all of our businesses and teams. We cannot thank Tom, Gabriella and the team enough for the effort in putting the report together,” said Anton van Vlaanderen, partner at 4Di Capital.

Ashwin Ravichandran, managing director of MEST Africa, said he was excited to partner Disrupt Africa on this initiative because of the “massive opportunities” it draws to the continent, thereby enabling innovators to do more

“Because of the work of organisations like Disrupt Africa, there has been a promising and encouraging increase in the data and insights on investments in Africa. This data shines a light on Africa’s burgeoning tech ecosystem while pointing the various ecosystem players towards better and more innovative ways of supporting local businesses to thrive,” he said.

“Tom, Gabriella and the Disrupt Africa team are doing important work in ensuring we have the right data when it comes to measuring the success of the African tech ecosystem. Future Africa is happy to support the Disrupt team in making sure actionable data and insights are available to founders, operators and investors looking to build the future of Africa,” said Iyinoluwa Aboyeji, managing partner of Future Africa. 

For more information, or to download the report, please visit disrupt-africa.com/funding-report, or email Gabriella on [email protected], or Tom on [email protected].

About Disrupt Africa

Disrupt Africa is the one-stop-shop for all news, information and commentary pertaining to the continent’s tech startup – and investment – ecosystem. With journalists roaming the continent to find, meet, and interview the most innovative and disruptive tech startups, Disrupt Africa is a true showcase of Africa’s most promising businesses and business ideas. Its research arm releases in-depth reports on various aspects of the African tech startup ecosystem. Details here.

About Novastar Ventures

Founded on the belief that the most valuable companies are those that address our biggest challenges, Novastar is a venture capital firm dedicated to helping founders build innovative businesses for the common good. Novastar partners with entrepreneurs who have the character, capacity, and ambition to transform markets and sectors. They are innovating business models to widen access, improve quality and lower cost for aspiring mass market consumers and producers in Africa. With offices in Nairobi, Lagos and London, Novastar is one of the largest platforms dedicated to financing and supporting early- and growth-stage businesses on the continent.

About MFS Africa

MFS Africa is a leading Pan-African fintech company, operating the largest digital payments hub on the continent. Connected to over 200 million mobile wallets in Sub-Saharan Africa, MFS Africa offers its partners unparalleled reach for scale across the continent. We allow merchants, banks, mobile operators and money transfer companies to leverage the ubiquity of mobile wallets as a safe, convenient, and cost-effective transaction channel. MFS Africa works in close partnership with players across the ecosystem to bring simple and secure mobile financial services to un- and under-banked customers. For millions of customers in Africa and beyond, we make borders matter less.

About Quona Capital

Quona Capital is a scale-up stage venture firm focused on fintech for inclusion in emerging markets. Quona partners have deep experience as investors and operators in both emerging and developed markets, and look for entrepreneurs whose companies have the potential to provide outstanding financial returns and promote breakthrough innovation in financial inclusion. To date, Quona has supported more than 30 financial technology companies expanding access for underserved consumers and small businesses in Latin America, South and Southeast Asia, and Sub-Saharan Africa. The firm has offices in Washington D.C., Bangalore, Mexico City and Cape Town. For more information, visit quona.com.

About 4Di Capital

4Di Capital is an independent venture capital fund manager based in South Africa’s “Silicon Cape”, specialising in high-growth technology venture opportunities, at the seed, early-and growth-funding stages. The fund manager has offices in Cape Town, South Africa and Atlanta, Georgia, U.S.A. and funds are managed by the GP partnership team of Anton van Vlaanderen, Erik van Vlaanderen, Justin Stanford and Laurie Olivier.

About MEST Africa

MEST is an Africa-wide technology entrepreneur training programme, internal seed fund, and network of hubs offering incubation for technology startups in Africa. For young aspiring and established African entrepreneurs, MEST Africa provides the skills, mindset, and experiences to build a globally successful tech company. Beyond tech and entrepreneurial skills training, MEST Africa provides a real-world advantage to entrepreneurs through funding, business incubation, and access to a global tech network.

About Future Africa

Future Africa is a fund that connects investors to mission-driven startups turning Africa’s most difficult challenges into global business opportunities. Our mission is to build a future where purpose and prosperity are within everyone’s reach.

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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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