A total of $6.5 billion, an 8% increase over 2021, was invested in the tech ecosystem across Africa, split across 764 deals in comparison to 2021’s 724 deals.
The annual report on Africa Tech Venture Capital has been published by Partech Africa, the VC fund dedicated to technology startups in Africa.
According to the report, which sets out to portray a realistic view of the ecosystem, the African IT ecosystem thrived at a higher pace than any other market globally despite the global decline in venture capital.
With +8% growth from 2021, the African tech ecosystem stands out amid the sharp decline in global VC funding.
Still at the forefront, fintech garnered 39% of the entire equity volume, with Nigeria maintaining its top rank with 23%.
Debt finance more than doubled in volume, hitting $1.55 billion through 71 deals [65% YoY growth] in the report, which includes both declared and confidential deals.
In contrast, there was a slight decrease in the number of equity rounds completed, with 653 African tech startups raising $4.9B [-6%] in 693 equity rounds [2% YoY growth].
The ecosystem was still accelerating in Q1 and Q2 of 2022 compared to Q1 and Q2 of 2021, according to the report’s focus on equity funding, which showed that Q1 and Q2 were +127% YoY and +83% YoY, respectively.
The leading investment locations in Africa continue to be Nigeria, South Africa, Egypt, and Kenya, with a percentage of the overall volume remaining largely constant at 72%. Despite a fall of 36% from 2021, Nigeria maintained the top spot, attracting $1.2B in funding; South Africa, Egypt, and Kenya each received over $0.7B in funding; Ghana rounded out the top 5 with just over $0.2B. In total, 28 nations received equity funding in 2022, with 13 of those nations being in Francophone Africa.
The report’s findings also showed that, despite the market slump, fintech is still the most well-funded industry in Africa, receiving 39% of all equity funding ($1.9B) and 45% of all debt funding ($691M). This year, several industries saw significant expansion and increased their share of equity fundraising activities, most notably Cleantech, which made a strong comeback with 18% of all equity funding at $863 million (+347% YoY), as well as 39% of all debt funding at $605 million.
The following are some more aspects that the report’s findings show:
The share of equity funding received by companies created by women increased to 22% in 2022 from 20% in 2021. Additionally, they contributed $644 million, or 13% of the overall equity funding, a decrease of 3% from 2021’s 16%.
Ghana ($202 million), Algeria ($150 million), Tunisia ($117 million), and Senegal ($105 million) were the only other nations that exceeded the $100M funding threshold except for the top 4 nations.
The IT ecosystem in Africa attracted 1,149 unique investors for the first time [+29% YoY in 2021] despite a slowing in the growth rate of equity investors.
Investor commitment to African technology has increased, with 89 individuals participating in 5 or more deals (compared to 65 investors in 2021).
With a healthy mix of local debt institutions, foreign lenders with emerging market vehicles, and Development Finance Institutions, the number of debt investors operating on the continent has increased by a factor of 2.5 year over year.
Click here to download the complete “2022 Africa Tech Venture Capital” report.
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