What Happened in the African Startup Ecosystem in 2022, in 10 Charts

(Ecofin Agency) – Back in 10 charts on the main trends in the start-up financing ecosystem in Africa in 2022.

According to the latest figures from the platform Africa the Big Deal, investor appetite for the growing African start-up ecosystem is not waning, despite economic uncertainties and fears of recession that, among other things, precipitated the decline. .

In 2022, Africa-focused venture capitalists injected at least $4.85 billion, up slightly from the $4.6 billion raised by African startups a year earlier. But, according to Max Cuvellier, co-founder of the platform, this value can be revised upwards and exceed US$ 5 billion, “ since December 31st trades are always underestimated ».

Even though its progress has remained marginal (less than 5%) compared to other years, the continent remains one of the rare regions to maintain growth. There were more than 1,000 transactions of $100,000 or more announced in 2022, an 11% increase from 2021. More than 1,000 unique investors participated in at least one transaction, a 15% increase from 2021. These numbers show that the booming startup sector in Africa has remained resilient in the face of headwinds.

However, this performance is not surprising – the ecosystem raised $ 1 billion in the first seven weeks of the year. This wave represented more than 25% of the total amount for 2021 – and was accompanied by just over 130 transactions.

https://public.tableau.com/views/Startup2022_16739491511910/DashEvolutionDealAmount?:language=fr-FR&publish=yes&:display_count=n&:origin=viz_share_link

The big four are still in the lead, but…

With more than US$ 3.6 billion, or 75% of the funds mobilized, the big four, formed by Nigeria, Kenya, South Africa and Egypt, continue to dominate the scenario. Those numbers, however, remain below 3% of their 2021 performance, which is due to declining performance in Nigeria and South Africa. The amounts mobilized by Nigerian start-ups decreased by 29%, due, in particular, to the drop in business in excess of US$100 million. In 2021, there were 5 of them, Opay, Flutterwave, Andela, Trade Depot, Palmpay. As of 2022, only Flutterwave ($250 million) and Interswitch ($110 million) have managed to cross that bar.

In South Africa, the drop is more brutal. The amounts collected fell by 47%. These contrary performances by Nigeria and South Africa, the two largest economies on the continent, were dampened by the dynamism of the Kenyan and Egyptian ecosystems. From US$418 billion, startups in the East African country raised US$1.063 billion last year, an increase of 154%. The progression is less significant in Egypt, but quite comfortable.

https://public.tableau.com/views/Startup2022_16739491511910/DashBigfour?:language=fr-FR&publish=yes&:display_count=n&:origin=viz_share_link

VCs also pay attention to other markets

While these numbers contrast with funds raised by other countries, more and more VCs are now targeting other markets across the continent: Ghana, Tunisia, Algeria. Instead, we witness a good harvest in these countries. Although, most of the time, the right result depends much more on an isolated mega-deal than on a general movement.

This is the case of the US$ 200 million operation of solar energy operator PEG Africa in Ghana, the US$ 150 million deal with Yassir, Algerian start-up VTC, or the US$ 100 million transaction concluded at the beginning of the year by InstaDeep, the Tunisian AI-focused biotech acquired earlier this year 2023 by BioNtech.

In Senegal, it is mainly the Wave that drives the country of Teranga. After the record round of 200 million dollars in 2021, the mobile money start-up did it again in 2022, in an operation that raised 91.5 million dollars, consolidating Senegal in the African top 10.

In total, excluding the big four, startups raised $1.2 billion in 2022, significantly better than the year before.

https://public.tableau.com/shared/Y7JMH2B4W?:display_count=n&:origin=viz_share_link

Fintech still holds the lead, but loses feathers

Fintech continued to be the main recipient of venture capital investments on the continent with 37% of funds injected into the African scene. Over 80% of that funding went to the big four.

However, the performance of fintech startups has weakened. Amounts raised have dropped significantly year over year, from $2.5 billion in 2021 to just $1.8 billion, a 27% drop. This situation is caused by the drop in activity in Nigeria and South Africa.

Kenya leads in water and energy investments

If Kenya has positioned itself as the second destination for funding, it is thanks to the massive injections received by its young offspring specialized in the energy and water sector. Kenyan start-ups operating in this sector have signed 15 deals, three of which were completed by Sun King, a supplier of off-grid solar systems for homes. On April 27, 2022, the energy company, formerly Greenlight Planet, announced that it had finalized a $260 million Series D led by BeyondNetZero, General Atlantic’s climate investment firm. Added to this are two other funding rounds of US$ 70 million and US$ 10 million, which bring the total mobilized by the start-up, which claims to be Kenyan, to US$ 340 million.

The vitality of the sector must also be associated with the acquisition by BBOXX of the Ghanaian start-up PEG Africa, for US$200 million in September of the same year.

In total, the energy and water sector attracted twice as much as in 2021, that is, more than US$ 874 million.

Yassir, standard bearer of e-logistics and e-commerce

The other equally dynamic sector in 2022 is transport and logistics, led by Algerian start-up VTC Yassir, with its US$150 million funding round completed last November.

We should also note the $125 million raised by Wasoko, an e-commerce start-up based in Kenya.

https://public.tableau.com/shared/5TK872QWY?:display_count=n&:origin=viz_share_link

The debt is growing

Wave, MNT-Halan, Moove or d.light… more and more of them are taking on debt to finance their development on the continent. The finding seems even more striking in 2022. At least 53 debt investments were identified, totaling US$724 million, 15% of the total funds raised. 42 different start-ups were affected compared to 33 in 2021.

But the year was mostly marked by a collapse in development finance. In a synchronous move, Series A, B and C all dropped as seed funding appears to be holding up.

https://public.tableau.com/shared/TFYY6QBB3?:display_count=n&:origin=viz_share_link

University: where to study to raise funds in Africa?

The CEOs of startups that received the biggest tranches of funding in 2022, such as Patrick Walsh of Sun King, Olugbenga Agboola of Flutterwave, Hugh Whalan of PEG Africa or Nourredine Tayébi of Yassir, all have something in common. All studied outside Africa, in the United States, England, France, Canada…

In 2022, almost 73% of the US$ 4.85 billion mobilized by African startups was raised by a CEO who obtained at least one degree outside Africa, i.e. an envelope of more than US$ 3.5 billion. On the mainland, you have to study in Nigeria, South Africa or Egypt for more chances to raise funds.

https://public.tableau.com/shared/7P7ZXHNN2?:display_count=n&:origin=viz_share_link

Financing for women even and even less

While investments in female-led African start-ups have increased nearly sevenfold in recent years, highlighting their investment-attracting potential, volume and values ​​are still well below what male founders have raised in the African startup ecosystem. continent. In 2022, the amounts raised fell even further. The share of investments going to female-led startups, which hovered around 6.5% in 2021, has fallen to 4%.

As for start-ups with exclusively female capital (founders), only 2.4% of funding (85 businesses) was allocated to them, against 85% (722 businesses) for those with an exclusively male team. The highest funding received by a startup founded exclusively by women is no more than $27.8 million. And it was Ubongo, a Tanzanian start-up that produces educational games for children, whose sole founder studied in Europe, that did it.

This poor performance can be attributed to the fact that young Africans are more concentrated in non-financial sectors, but other factors still need to be taken into account.

https://public.tableau.com/shared/QQDB5CMRW?:display_count=n&:origin=viz_share_link

Where are the funds going?

By sub-region, West Africa remains the top destination for venture capitalist funds on the continent, thanks in large part to Nigeria. Despite a slight year-on-year decline (-12% from US$2 billion in 2021 to US$1.8 billion in 2022), the Nigerian ecosystem alone accounts for almost 70% of this value. Other significant funding went to Ghana and Senegal.

However, it should be noted that the dominance of the western part of the continent is increasingly threatened. Its share dropped from 43% in 2021 to 37%.

In 2022, East Africa, buoyed by momentum in Kenya, crossed the US$1 billion mark for the first time, attracting twice as much funding in 2022 as the previous year (US$1.2 billion, compared to approximately US$ $600 million). This feat is mainly driven by the Kenyan startup universe.

North Africa remains one of the main recipients of funds. Startups in this region were able to raise $1.1 billion, up 62% year-over-year.

This is the first time that North Africa has also crossed the symbolic threshold of 1 billion dollars, indicates Max Cuvellier. This is an increase driven by rounds from Algerian Yassir ($150 million, Series B), Egyptian fintech Mnt-Halan ($150 million, debt) and Tunisian biotech InstaDeep (100 million, Series B).

Weighed by the poor performance of South Africa, Southern Africa is the region that suffered the most losses (-44% compared to the previous year), going from 1.1 billion dollars in 2021 to just over 600 million dollars in 2022 .

Finally, Central Africa, despite having doubled its 2021 numbers, remains by far the least funded region, totaling only around $50 million. Its total funding share, however, surpassed 1% for the first time.

https://public.tableau.com/shared/XN5HNDCGQ?:display_count=n&:origin=viz_share_link

Launch Africa leads investors

With its participation in at least 60 transactions last year, Launch Africa, the Mauritius-based venture capital fund, is the most active investor on the continent, alongside the Black Founders Fund, Google’s fund that provides financing non-dilutive to black-founded start-ups.

https://public.tableau.com/views/Startup2_16741401883240/Classementinvestors?:language=fr-FR&publish=yes&:display_count=n&:origin=viz_share_link

AY Combinator, famous Californian accelerator, closes the top three, involved in 43 operations.

E. Kakpo carriage

special publication

Leave a Comment