In 2022, total funding invested into tech startups in Africa reached $6.5bn, an increase of 8% vs 2021, spread across 764 deals – compared to 724 rounds in 2021, according to Partech Africa.
The annual report on Africa Tech Venture Capital, consisting of disclosed and confidential deals, saw debt funding more than double in volume, reaching $1.55bn through 71 deals, a 65% YoY growth.
Also read: “Let Us Act to Transform Africa’s cities”— Adesina to African Mayors
In comparison, equity rounds showed a slight decline, as 653 African tech startups raised $4.9bn (-6%) in 693 equity rounds (2% YoY growth).
Focusing on equity funding, the report revealed the ecosystem was still accelerating during Q1 and Q2 of 2022 compared to 2021, with the YoY comparison showing Q1 and Q2 at +127% YoY and +83% YoY, respectively.
In 2022, fundraising activities remained flat across all stages.
At $1.4m, Seed+ ticket sizes averaged higher in 2022 (+12% YoY), while Series A remained the same at $8.5m.
Later stages reverted to 2019 levels, as Series B and Growth round sizes dropped by -23% and -50% YoY, respectively.
In addition, 2022 witnessed a significant reduction in the number of megadeals (over 100m), with only seven deals compared to 14 in 2021.
Also read: Africa needs up to US$65B in loans yearly to curb food imports
Tidjane Deme, General Partner at Partech, said: “2022 was a particularly challenging year for the venture ecosystem worldwide, as venture and growth investors scaled back their investment by a third. However, by comparison, our report revealed that the African tech ecosystem showed great resilience, as more investors have doubled their commitment to the continent by investing in local teams and funds dedicated to the market, proving to be the best way forward.”
Overall, Nigeria, South Africa, Egypt and Kenya remain the top investment destinations in Africa, with a share of total volume staying relatively steady at 72%.
Nigeria retained the top rank, bringing in $1.2bn in capital, despite a decline of 36% from 2021; South Africa, Egypt, and Kenya each attracted over $0.7bn in funding, with Ghana completing the top 5 with just over $0.2bn.
Overall, 28 countries attracted equity funding in 2022, 13 in Francophone Africa.
The report’s findings also revealed that Fintech, which has historically attracted sizable investments, was the most impacted by the slowdown in the number of large rounds.
However, fintech remains the most funded sector in Africa, across all sources of capital, with 39% of the total equity volume ($1.9bn) and 45% of the total debt volume ($691m).
Other sectors have experienced substantial growth and gained a meaningful share of the equity funding activity this year, most notably Cleantech, which made a big comeback with 18% of total equity funding at $863m (+347% YoY) but also 39% of the total debt funding at $605m.
Also read: Water security in Africa starts with educating our youth – by Chetan Mistry
The report’s findings also show that despite a slowdown in the growth rate of equity investors, Africa’s tech ecosystem attracted 1,149 unique investors for the first time (+29% YoY vs 2021).
African tech has seen more investors committed, with 89 participating in 5 or more deals, compared to 65 investors in 2021.
Cyril Collon, General Partner at Partech, added: “Much of our methodology has remained the same over the years, and we, therefore, can provide a snapshot of how the African continent has evolved over the years. Nigeria and the fintech vertical have remained at the top spot; however, in an environment where equity funding is more challenging, debt has proved to be a solid alternative source of African tech startups in 2022, which signals a maturity within each sector.”
