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African tech took center stage in 2021 – FiratNews

African tech took center stage in 2021 – TechCrunch

Two years in the past, the African tech ecosystem noticed newfound consideration from international gamers that translated to the continent’s finest yr of receiving enterprise capital. From various sources, it’s estimated as much as $2 billion went into African tech startups in 2019.

With high-profile visits from probably the most well-known Jacks (Ma and Dorsey), a long-awaited first IPO by e-commerce big Jumia and large $100 million rounds, it was an indication of issues to return for African tech.

However two months into 2020, the pandemic did a superb job of decreasing expectations as funding actions from native and worldwide traders slowed down.

It wasn’t a foul yr, although. African startups almost raised $1.5 billion and noticed a few fascinating exits: Stripe-Paystack and WorldRemit-Sendwave.

Coming into 2021, the bullishness of African tech stakeholders returned — and why not? As companies reopened globally and the pandemic drove folks to undertake new habits in e-commerce, work, spending cash, on-line supply, and studying, enterprise capital into varied industries was poised to extend immensely, and Africa wouldn’t be exempt.

Predictions had been made on how a lot the continent’s startups would elevate in December. AfricArena, a tech ecosystem accelerator, pegged offers to shut between $2.25 billion and $2.8 billion. Stephen Deng, the co-founder and companion of DFS Lab, a agency that invests in digital commerce startups, serially in contrast the 2016 Southeast Asia funding panorama to the place Africa may be in 2021, at $3 billion.

These predictions weren’t totally off the mark. Ultimately, data from the likes of Maxime Bayen and Briter Bridges made 2019 numbers seem like little one’s play. 2021 was when African tech reached an inflection level and took heart stage as corporations raised over $4 billion (greater than they acquired in 2019 and 2020 mixed).

From minting 5 unicorns to witnessing extra million-dollar raises by feminine CEOs, we highlight among the occasions that formed this pivotal second in African tech.

What’s a report yr of funding with out some unicorns?

Attaining unicorn standing — a privately held firm with a valuation of $1 billion — is undoubtedly one of many vainest achievements for any startup, but it stays probably the most coveted.

In Africa, the primary two unicorns had been Jumia (in 2016) and fintech big Interswitch (in 2019). As Jumia went public on the NYSE in 2019, it ceased to be a unicorn and have become a typical billion-dollar publicly held firm.

It’s an analogous case with Egyptian funds firm Fawry. It went public on the Egyptian inventory market (the primary indigenous tech firm to take action on African soil) in 2019. Nonetheless, in contrast to Jumia, Fawry solely reached a billion-dollar valuation a yr after going public. So, it isn’t and technically wasn’t a unicorn.

Interswitch was the continent’s sole unicorn till 5 extra had been minted this yr. 4 are fintechs: Flutterwave, OPay, Wave and Chipper Money, whereas one is tech expertise market Andela.

Flutterwave acquired its horn in March at $1 billion; OPay in August at $2 billion; Wave and Andela the next month, at $1.7 billion and $1.5 billion, respectively; Andela in September raised at a $1.5 billion valuation; Chipper Money in November at $2 billion. In the meantime, Interswitch, the only unicorn between 2019 and 2021, is price $1 billion.

A few causes are behind this sudden surge in unicorn numbers on the continent. Extra skilled founders exist and particular markets, notably within the Huge 4 (Nigeria, South Africa, Egypt and Kenya), present a mixture of matured however nonetheless open-for-disruption traits.

Additionally, sectors similar to fintech hold opening up in methods by no means seen earlier than and there’s a rush of overseas cash from first-time traders in early and later phases, concurrently.

Worldwide traders participated from pre-seed to Collection E phases

Whereas international traders have beforehand invested in African startups, their exercise appeared extra distinguished in 2021, in all probability due to their participation throughout the board.

As an illustration, traders similar to Berlin-based VC agency Goal World and famend funding agency and hedge fund Tiger World reduce checks throughout early and development phases.

Goal invested in each Collection A rounds of Kuda and Mono (together with the Collection B spherical of the previous). The European VC additionally led the pre-seed rounds of Kippa and Edukoya. On the opposite hand, Tiger led Union54’s seed spherical, Mono’s Collection A and later rounds in FairMoney and Flutterwave.

Different offers the place development companies participated in early and development phases included Sequoia in Telda’s pre-seed; Wave’s Collection A, by way of stealthy wealth administration fund Sequoia Heritage; and OPay’s Collection C, by way of its subsidiary fund Sequoia Capital China.   

There was additionally motion from different traders, similar to Dragoneer, FTX, Constancy, SVB Capital and Sam Altman, who acquired concerned in single giant offers for the primary time. It was routine for different companies like Tencent because it invested within the development rounds of uLesson, Ozow and TymeBank– and SoftBank, who, by way of its Imaginative and prescient Fund 2, led two of the continent’s many nine-figure rounds in 2021: unicorns Andela and OPay.

African startups raised extra $100M+ rounds this yr than ever earlier than

OPay had one of many three nine-figure offers in 2019 after elevating a $120 million Collection B spherical. Others included Andela’s $100 million and Interswitch’s $200 million offers. So think about the shock the next yr when no nine-figure deal befell (simply because the continent didn’t produce any unicorn).

The draught didn’t final lengthy, as Africa not solely had its highest unicorn yr but additionally recorded probably the most nine-figure rounds (11 from 10 startups) in a single yr.

Let’s begin with the unicorns: Flutterwave’s Collection C was $170 million; OPay raised a $400 million Collection C; Wave and Andela every picked up $200 million. Then Chipper Money did the double: a $100 million Collection C and a $150 million extension for its unicorn spherical months later.

Others embrace TymeBank’s $180 million Collection B, Jumo and MNT-Halan’s $120 million rounds, TradeDepot’s $110 million and MFS Africa’s $100 million.

The one non-fintech offers had been Andela and TradeDepot (though the latter has an embedded finance play). Additionally, all however two offers had been solely equity-based: TradeDepot and MFS Africa raised a mixture of fairness and debt.

A handful of native acquisitions and a monumental exit

Digital funds gateway MFS Africa is one in all Africa’s few company traders and acquirers. Over the previous 5 years, the corporate has made strategic bets throughout neglected startup areas in Africa, investing in Julaya, Maviance and Numida. And when it comes to acquisitions, Beyonic and, most lately, Baxi.

Final yr, the pattern of seeing native corporations purchase one another performed out and continued into 2021. Some fascinating acquisitions embrace TLcom-backed Kenyan client expertise platform Ajua shopping for WayaWaya; Nigerian bus reserving and Techstars-backed Treepz increasing into Ghana and Ugabus after getting Stabus and Ugabus; and Flutterwave making a foray into the creator financial system area with the Disha acquisition.

Others embrace Jiji’s acquisition of Cars45, Egypt’s B2B e-commerce platform MaxAB buying YC-backed Waystocap, thus increasing into Morocco, and Cheki promoting its companies in Kenya and Uganda to Nigeria’s Autochek.

Just like the MFS Africa-Baxi deal — which each events claimed to be the second-largest fintech acquisition in Africa after Stripe-Paystack — the opposite acquisitions listed had been undisclosed. 

Why African startups don’t disclose their acquisition determine is a subject for an additional day. Personally, reporting such offers will not be interesting going ahead (if they continue to be undisclosed) except they contain worldwide growth performs. Living proof: Nigerian healthtech Helium Well being buying UAE’s Meddy (the primary of its sort between sub-Saharan Africa and the GCC) and Australian BNPL participant Zip shopping for up South Africa’s PayFlex.

And worldwide growth by way of acquisition will get extra thrilling when a determine is connected; as an illustration, knowledge heart Equinix introduced that it will purchase Nigeria’s MainOne, for $320 million. The information was the spotlight for this yr’s acquisition offers, not just for its dimension but additionally as a result of MainOne is a female-led firm, with Funke Opeke as its CEO.

Extra female-led startups raised million-dollar rounds

Funke Opeke is among the only a few founders to have come this far: working an African tech firm to the purpose of exit. She’s additionally in all probability the one feminine founder on the continent to have raised 9 figures cumulatively for her enterprise.

Opeke’s expertise is an outlier. In Africa and globally, funding doesn’t come straightforward for female-led corporations. A report by Briter Bridges from the center of this yr checked out 1,100+ corporations to have acquired VC cash between 2013 and Might 2021 (pegged at $20 million or much less).

Per the report, solely 3% of the $1.7 billion raised inside this era went to all-female founding groups in comparison with 76% for all-male groups.

So, it’s nice information when female-led startups elevate one million {dollars} or extra in Africa. And it not directly contributes to how properly the area performs, as we are able to attest to this yr which recorded greater than ten offers, signalling an enchancment in VCs (each gender-focused and gender-agnostic) sourcing for female-led groups to spend money on.

The feminine-led startups that raised one million {dollars} or extra this yr embrace Shuttlers, Bankly, Lami, Okra, Klasha, Akiba Digital, Ejara, Kwara, Edukoya, Reelfruit and Jetstream.

Native traders — and founders — stepped up their sport

Alitheia IDF is an investor in Reelfruit and Jetstream. The ladies-focused agency, led by principal companions Tokunboh Ishmael and Polo Leteka, has a $100 million non-public fairness fund for gender-diverse companies in Africa.

It’s additionally one of many native funds that raised big sums of cash this yr to jot down checks for African startups throughout totally different phases. Others embrace Ventures Platform, LoftyInc Capital, Voltron Capital and 4DX Ventures, all sub-Saharan-based VC companies with a pan-African technique.

Up north, traders similar to Sawari Ventures and Algebra Ventures pulled their weight backing startups, notably in Egypt, the place startup innovation and funding has taken off astronomically.

Native and Africa-focused traders additionally took up total seed to Collection A rounds of some corporations in sub-Saharan Africa (Appzone, Payhippo, to call a couple of), which not often occurred in earlier years. Future Africa, Kepple Africa, Launch Africa, and others continued with their tempo from 2020 and wrote many new and follow-on checks this yr.

We even observed how energetic founders like Flutterwave CEO Olugbenga’ GB’ Agboola, Paystack founders Shola Akinlade and Ezra Olubi, and Chipper Money founders Ham Serunjogi and Maijid Moujaled took half in some early-stage rounds too.

Nigeria grew to become the unicorn capital; Egypt, a powerhouse

In November 2019, three fintech corporations, Interswitch, OPay and PalmPay, raised a cumulative $360 million from American and Chinese language traders. That introduced Nigeria as Africa’s unofficial capital for fintech funding and digital finance startups.

Fintech alternative in Nigeria is the biggest on the continent. With over 40% of Nigerian adults having financial institution accounts and digital funds hitting greater than $250 billion in 2019, it’s no shock that the startups facilitating transactions for the unbanked (OPay) and offering gateways (Interswitch and Flutterwave) are actually price greater than $1 billion.

The three corporations, together with Andela, began operations in Nigeria’s business metropolis, Lagos, incomes Nigeria the standing of Africa’s unicorn capital in 2021.

For a very long time, Nigeria has been one of many three international locations that obtain the majority of native and worldwide enterprise capital, together with Kenya and South Africa. The three international locations current Africa’s most linked populace and rising financial system; the right atmosphere to draw overseas capital earlier than others.

However then Egypt stepped into the image in 2017, and with time, the North African nation grew to become a part of the “Huge 4” because the nation started attracting enterprise capital eyeballs. And after quietly spending the final couple of years on the rear, Egypt picked up impressively in 2020 and this yr surpassed Kenya to grow to be the area’s third most energetic funding area.

As this report aptly put: “Seemingly from nowhere, Egypt is all of the sudden on the radar as a key African startup funding vacation spot, highlighting the prospects for continental development of the nascent sector.”

Egypt additionally has bragging rights in producing the primary SPAC deal on the continent. In July, Cairo and Dubai-based ridesharing firm Swvl introduced that it was going public by way of a merger with Queen’s Gambit Progress Capital. It’s a deal that can worth Swvl, one of many nation’s success tales, at virtually $1.5 billion as soon as accomplished.

With a big inhabitants and spectacular GDP per capita, the North African nation raised virtually $600 million this yr. Whereas it’s lower than what Nigeria and South Africa raised at over $1.4 billion and $830 million, respectively, some observers predict that Egypt will surpass South Africa by subsequent yr if it retains up with its tempo.

There are a couple of causes behind this considering. In Nigeria, South Africa and Kenya, fintech is the sector that receives probably the most funding. The most important sector is e-commerce and retail in Egypt, however the nation is a scorching spot for fintech, too, evident in holding the very best pre-seed rounds in each classes (Rabbit’s $11 million and Telda’s $5 million rounds).

After I wrote this piece earlier this yr, the biggest pre-seed spherical on the time was Autochek’s $3.4 million. Rabbit’s eight-figure pre-seed is thrice that quantity. Sources lately advised FiratNews that one other Egyptian startup will shut a pre-seed spherical that prime subsequent yr.

Mindblowing pre-seed investments like these are one of many many indicators of how briskly enterprise capital has picked up in Africa. The continent’s startups raised over $4 billion this yr and minted 5 unicorns. Nobody is aware of what to anticipate in 2022, however there’s a nuanced sanguinity that we might see “extra of all the things” together with some IPOs (I may be reaching right here) so brace yourselves.

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