Fintechs account for nearly two-thirds of the $ 4.9 billion raised by African tech companies last year. Fintech groups also dominate in terms of funding in excess of $ 50 million, accounting for 40% of the total number of tech companies.
The Covid-19 factor
Of the $ 4.9 billion raised by African tech companies in 2021, nearly two-thirds went to fintech companies, a new report shows. For transactions where the capital raised exceeded $ 40 million, 40% of those transactions were in fintechs.
Source: Africa Investment Report 2021.
As the latest Africa Investment Report shows, fintech dominance finally culminated in 2021 in a phase with “the highest number of individual non-M&A”. [mergers and acquisitions] Deals over 100 million US dollars “so far on record. The report also shows that Nigeria has the largest percentage of fintech companies that have raised more than $ 100 million.
Meanwhile, the report suggested that the Covid-19 pandemic could well be the main explanation for the surge not only in funding for fintechs but also for non-fintech companies.
“Logistics and energy follow in terms of funding volume, but the latest wave of digitization – possibly reinforced by Covid-19 – is driving sectors such as e-commerce, agriculture and healthcare,” the study report concluded.
Promotion highly concentrated
However, the same report admits that most of the funding raised in 2021 was concentrated on a few projects. The report explains:
Although in some cases highly concentrated, [which] accounts for less than 3% of the total disclosed transactions but accounts for more than 55% of the total disclosed funding, this investment size carries significant weight and acts as a pull factor for multiple investors.
In addition to equity financing, the data from the Africa Investment Report show that debt financing is increasingly becoming a viable form of financing. To support this claim, the report suggests that 6% of total funds disclosed in 2021 was debt.
Source: Africa Investment Report 2021.
Regarding the origin of late-stage investors, the data shows that the US is by far the largest source of capital for African technology companies with a share of 62.5%. Great Britain follows in second place with a share of 7.5%, followed by South Africa with 6% and Canada with 4%.
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Terence Zimwara
Terence Zimwara is an award-winning journalist, writer, and writer based in Zimbabwe. He has written extensively on the economic problems of some African countries and how digital currencies can provide an escape route for Africans.
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