African startups raised a sum of $4.65 billion in funding in 2021, despite the effect of the pandemic on world economies, surpassing its record in previous years. This is contained in a report titled Africa Investment report released by Briter Bridges.
According to the report, financial technology companies accounted for 62% of the total funds raised in the reference period, with the health and biotech sector being a distant second with 8%, while logistics companies accounted for 7% of the total.
The report also highlighted that there were more than 740 announced deals in the review period, which is 2.5 times more than what was recorded in the record year of 2019. Also, at least 6% of the total funding were in form of debt financing.
A further look at the report shows that Nigerian accounts for most of the deals, with South Africa and Kenya following in that order.
This is in line with Nairametrics’ Dealsbook report, which revealed that Nigerian startups raised over $1.6 billion in funding in 2021, with the likes of OPay, Chipper Cash, and Andela being at the forefront of the announced deals.
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In the same manner, the Briter Bridges report also listed OPay, Chipper Cash, ZEPZ, Trade Depot, Zipline, Andela, Tala among a list of companies that raised over $100 million in single rounds in 2021.
On Mergers and Acquisitions
Also, in 2021 Africa’s startup M&A market, despite being almost twice as active as the previous year with 33 acquisitions as against 17 deals reported in 2020, accounted for a smaller proportion of total capital inflows compared to the previous year.
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In 2020, almost 50% of investments consisted of acquisitions, for example, WorldRemit’s deal with Wave, the acquisition of Paystack by Stipe. However, there were reports of the acquisition of Nigerian Mainone by Euinix towards the end of 2021.
According to the report, acquisitions accounted for about half of total known deals in 2020, however, in 2021 it amounted to less than 1%, although could go as high as 3% to 4% if several undisclosed and high-profile transactions were considered.
Where investors are coming from
According to the report, the top 20 deals recorded in the review year captured 65% of the total volume deployed on the African continent, indicating that the investors on the continent are beginning to step up by investing in local startups.
Meanwhile, a diagnostic of the investors reveal that most investors behind the deals in 2021 were from the United States and the United Kingdom. South Africa and Mauritius are the top two African countries headquartering investors involved in these deals.
It is worth noting that a growing number of Asian players, especially corporates, such as Softbank, Tencent, and Toyota are increasingly taking part in large rounds involving African startups.