Kenya took the lead in startups funding in Africa last year attracting Ksh 34.4 billion (US$ 348 million)(+136% YoY) in funding over 44 deals (+76% YoY), according to Partech Africa’s annual report on the financing of African Startups.
Nigeria has attracted US$ 306 million (+167% YoY) in funding over 26 deals (+53% YoY) and South Africa slowed down compared to Kenya and Nigeria, with US$ 250 million (+49% YoY) in funding over 37 deals.
The three countries received 78% of the total funding with Egypt close behind, an exact repeat of 2017.
In the rest of Africa, there were 19 countries with at least one equity tech deal above US$ 200K this year, compared to 13 countries in 2017. So, it is clear that the rest of the continent is actually growing as fast as the top 3 markets and now attracts decent attention. It’s important to note though that Egypt takes the lead here with 19 deals, nearly catching up with South Africa in activity. Regarding French-speaking Africa, Senegal confirms itself as the leading hub with US$ 22 million raised in 4 deals.
Tanzania received US $75 million in startups funding while Rwandan startups secured US $19 million. Only US $2 million was invested in the startup sector in Uganda.
Partech Africa says and the numbers confirm the attractiveness of African entrepreneurs and their ability to transform the continent into a global powerhouse.
Cyril Collon and Tidjane Dème, General Partners from the Partech Africa Fund, added the numbers also confirm the startup’s enthusiasm for the continent: US$1.163 billion was raised in equity funding in 2018, i.e. a 108% YoY growth.
The report, which is the third the team have produced, is based on the same methodology as the previous years: it covers equity deals in tech and digital spaces, and funding rounds higher than US$200K and lower than US$100 Million. Deals covered are both disclosed and undisclosed and the report only includes African start-ups i.e. companies with their primary market in Africa itself (i.e. in terms of operations and revenues).
In 2018, 146 African start-ups raised a total of US$1.163 Billion in equity through 164 rounds, this is a +108% growth YoY, compared to +33% in 2016 and +53% in 2017. This represents x4.2 growth multiple over the last 36 months.
“It’s quite simply astonishing. When we started our journey to create the Partech Africa Fund in 2015, we had anticipated the $1 billion mark to be broken by 2020. We are now already 2 years ahead of our projections,” says Collon.
The Partech Africa report tracks a total of 164 rounds raised by 146 start-ups compared to 128 rounds from 124 start-ups last year, a +28% growth YoY. What is interesting is that the number of Series A & B stage start-ups attracting funding are massively accelerating with 70 rounds (+46% YoY), and that the number of large venture growth deals have increased as well, with 14 rounds (+100% YoY), totaling US$ 602 million (+120% YoY). Regarding investors, PE investors and major corporate players are now joining the game earlier, investing early & growth stage tickets in African tech start-ups.
Driven by Fintech, financial inclusion remains the main investment sector in the continent, attracting 50% of the total funding. However, Collon and Dème witness a shift in the second most popular sector with 30.4% of funding (vs 13% in 2017) now being invested in B2B Tech adoption, while Consumer Services account for 19.6% (vs 42% in 2017).
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“B2B models are naturally attractive for entrepreneurs. At a time where monetization is at the heart of the challenges, enterprise clients can pay and enable to present unit economics that can converge more quickly than B2C models. Of course, this is reassuring the investors,” explain Dème.
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