Record USD 5.2 billion Venture capital goes to African start-ups last year

African start-ups attracted a record USD 5.2 billion. Venture capital, last year, bounced back from a pandemic-included dip in 2020 with a nearly five-fold increase in investments according to data released by an industry group on Tuesday

The success of companies like Nigeria’s Pay-stack acquired in 2020 by USA payments firm Stripe, and fellow fintech Flutterwave, valued at over USD 3 billion, has fuelled international interest in and coming businesses on the continent.

“African start-ups raised more in 2021 alone than the preceding 7 years combined,” the African Private Equity and Venture Capital Association (AVCA), which promotes private investment on the continent, wrote in a report.

Much of the investor’s focus has been on fintech start-ups seeking to meet the needs of the continent’s largely unbanked population. The data compiled by AVCA showed the financial sector accounted for 60% of the investments by value and nearly a third of deals by volume.

Nigeria, a hotbed of new fintech firms, was the leading destination for venture capital in Africa last year, surpassing South Africa, the continent’s most developed economy.

Most venture capital deals were concentrated in early-stage funding rounds. However, late-stage funding ballooned in 2021, including a nearly 40-fold increase in financing raised by series C fundraising rounds. FinTech’s Chipper Cash, MFS Africa, Yoco, and OPay together raised USD 833 million via Series C funding rounds. While deals of less than USD 1 mil. Represented nearly a 3rd of transactions by volume, those worth over USD 5O million accounted for 62% of the total value capital financing in Africa last year.

credit — Reuters