African tech still grew faster than any other region with two times the activity of last year and more than three times the amount invested, reaching $5.2 billion (R80bn), according to a Partech Africa’s annual report on VC Funding for African Startups.
This was a year of historic growth as 681 rounds of equity fundraising brought in a total of US$5.2 billion. When including debt, this total reached US$6 billion in 724 rounds. The 2021 new record indicated a super-active ecosystem, where almost three deals were closed every weekday.
The number of deals almost doubled, increasing by 92 percent year on year (y/y). This rate of growth made Africa tech one of the fastest-growing ecosystems in the world. In 2021, it accelerated significantly, far surpassing the past six years of growth, with a compound annual growth rate of 45 percent, the report found
Mega-deals drove record levels of funding, as last year witnessed 14 of such deals (above US$100 million in equity only) coming from 12 companies. Some 48 percent (US$2.47bn) of total equity funding went to these mega deals. Before 2021, only eight mega deals had been recorded in the entire history of the African funding ecosystem. Last year was the year US$100 million plus funding rounds became normal, with almost twice the number of mega deals made in a single year as in the whole of the ecosystem’s history.
The report also showed that the average round size increased across all stages, picking up again strongly after 2020’s downtrend. While Seed, Series A and B round sizes grew strongly, Growth deals saw an exceptional inflation of average round size at plus426 percent y/y, due to the surge in mega-deals at this stage.
As a result, average round sizes across all stages bounced back to above their pre-Covid levels, with strong recovery and continued growth across all venture capital market segments in Africa.
Some 37 African tech start-ups raised a total of $767m in 43 debt rounds. According to the report, as start-ups grew and achieved more predictability, debt financing became a useful instrument which helped accelerate growth, while limiting dilution from equity rounds. Last year set real trends in this space, with strategic debt players launching dedicated debt funds targeted to emerging markets, with Africa in particular. Nigerian start-ups raised almost half of the total amount of debt ($345m), taking 45 percent of the total debt raised.
Partek Africa said Nigeria was the undisputed leader in the Africa tech venture capital ecosystem, pulling ahead on both funding amount and number of equity rounds. While Nigeria was in a league of its own with $1.8bn – 34 percent of all African equity funding – Egypt, South Africa and Kenya also attracted more than half a billion each. Senegal completed the top five as francophone Africa accelerated 2.6x faster than the continent, at 695 percent y/y growth in amount invested.
For sector breakdown, driven by mega deals, fintech accounted for only 32 percent of deals, but a large majority (63 percent) of funding. Digitisation of foundational sectors of the economy (commerce, education, energy, health, logistics) meant each of these sectors broke into the $200M range.
Female-founded start-ups raised 20 percent of all rounds in 2021, up 7 percentage points from 13 percent in 2020. They took $834m, or 16 percent, of the total equity funding, up 2 percentage points from 14 percent in 2020.
The continent’s tech ecosystem attracted 2x more investors in 2021 ( more than 101 percent y/y) with 891 active investors. They showed more commitment to the market, with 268 involved in two or more deals (above 144 percent y/y) and 65 involved in give or more ( above 195 percent y/y).
The sixth Partech Africa annual report on African tech start-ups was based on the same methodology as the previous years, which covered equity deals in tech and digital spaces and funding rounds higher than $200 0000.-BUSINESS REPORT
