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Venture capital investments in Africa set to hit record highs this year – TechCrunch


Investments in African startups continue to grow at a steady pace since reports started counting in 2015. That year, the publications Disrupt Africa and Partech independently published contrasting research and figures showing that venture capital investments reached $ 186 million and $ 277 million, respectively. Those are ridiculously low numbers for a continent considering that four-year-old Snapchat raised over $ 500 million in a single round in the same year. However, wWhile the funding disparity between Africa and a single high-growth US startup continues, the good news is that more money is coming to the continent..

Africa’s venture capital investments hit record high in 2019, Partech report says. According to Partech, 234 African tech companies have raised $ 2.02 billion in 250 rounds of equity. This indicates a 74% increase from the 2018 figure of $ 1.163 billion raised by 146 startups in 164 rounds.

The has been shared optimism that 2020 would mark a new high, but that was before the pandemic hit. For this reason, the African tech ecosystem accelerator AfricArena has predicted that venture capital funding for startups on the continent will be between $ 1.2 billion and $ 1.8 billion.. How can be described as an educated guess or prediction calculated by the publication, the year-end reports from Partech and Briter Bridges estimated the total investment raised at $ 1.4 billion and $ 1.3 billion, respectively.

This year, AfricArena, in a new report, predicts that venture capital funding to startups across the continent would increase to between $ 2.25 billion and $ 2.8 billion, which, if reached, will surpass 2019 figures for a record on the continent..

Here is the rationale for predicting an excerpt from the report:

We expect the first two quarters of 2021 to be similar to Q4 2020 with the combination of factors. Vaccination campaigns are likely to take longer than expected to have a significant impact. However, this deployment – however long it actually takes – will eliminate the major uncertainty about the end of the pandemic, which is only a matter of time.

Accordingly, we expect a extremely a strong acceleration of deals from seed to Series B as well as major growth deals, as well as some IPOs (Nigeria’s Interswitch, for example), which will propel trading activity to unprecedented levels of activity before. In April 2020, our forecast for 2021 ranged from less than $ 1.6 billion to over $ 3 billion. The worst-case scenario was based on a prolonged and fragmented impact on African economies and the best-case scenario taking into account a full recovery in the first quarter of 2021. Based on the above observations, we now estimate 2021 to be between $ 2.25 billion and $ 2.8 billion.

As of April 30, the total disclosed venture capital funding was just over $ 800 million, according to Maxime Bayen, deal tracker and senior venture capitalist at BFA Global. If this rhythm is guarded throughout the year, African startups could raise more than $ 2 billion.

AfricArena

Image credits: AfricArena

In 2020, the number of start-up agreements increased, but there was a decline in growth agreements and overall the size of the banknotes, constituting the decrease in financing activities. Seed tours increased 80% year over year, according to Partech, and accounted for 64% of all deals closed. In total, African startups have raised $ 220 million in seed funding, a 47% increase year-over-year. Series A and B experienced similar growth. Series A trades grew 9% (86 rounds) and Series B trades by 16% (29 rounds), but their investment size fell 5% ($ 447 million) and 8% ( $ 449 million), respectively.

Growth deals also fell 16%, and only two deals were closed over $ 50 million from the 10 that took place in 2019, some of which include Interswitch, OPay, Branch and Andela..

Driving force to surpass the $ 2 billion mark in 2021 relies on VCs to close more deals and startups to replicate the great growth cycles of 2019. The first appears to be in place as African startups continue to raise funds week after week. However, there is still work to be done be finished for the latter, as only two African startups have raised more than $ 100 million in a single round so far – fintech startups Flutterwave and TymeBank.





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