Startup funding in Africa broke more records in 2019

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Image: Reuters/Kham
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The inflow of venture capital into the African technology ecosystem is not slowing down.

Last year, startups operating on the continent received a total of $1.3 billion in startup funding, an annual funding report by WeeTracker shows. It’s the first time annual Africa-focused startup funding has crossed the $1 billion mark according to Weetracker’s methodology although Partech Ventures, which also compiles annual funding report, notes the billion-dollar mark was reached last year.

The difference in funding totals of annual reports usually boil down to variations in methodology, but for its part, WeeTracker’s reports covers private companies that have raised investment to operate in Africa irrespective of where they are headquartered. It also only covers deals that are verifiable via press release, the startup or investor or regulatory filings.

Regardless, the $1.3 billion invested in African tech companies 2019, compared to just under $200 million invested in 2015, underscores the rapid emergence and growth of technology ecosystems across the continent, particularly over the past decade.

Nigeria and Kenya were the continent’s top startup investment destinations, jointly accounting for 81.5% of investment received in 2019. For its part, Nigeria ranked top both for number of deals done and for their value as startup investment received grew nearly five fold compared to 2018.

Elsewhere, Egypt also recorded strong growth with investment more than doubling in the last year, largely thanks to the funding raised by Swvl, the bus hailing company, which raised $4 million in June and has also expanded across and beyond the continent. In contrast, South Africa, typically a top startup investment destination, recorded decline in 2019 with both the number and value of deals dipping.

The sizes of funding rounds also notably gotten bigger in 2019 as 26 deals (equaling 6% of the deals total), accounted for 83% of total funding raised in 2019.

The bumper rounds were largely recorded in fintech with the sector dominating startup funding yet again thanks to sustained interest from global payments giants backing African fintech companies: in November, Visa paid $200 million for a 20% stake in Nigerian payments processor, Interswitch making it Africa’s first fintech unicorn. Just as importantly, new interest in African fintech emerged from China with OPay and PalmPay, two new payments companies in Nigeria, jointly receiving over $210 million in funding predominantly from Chinese investors.

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