Strategy Note /

Africa start-up funding more than doubled in 2021; 2022 could be even better

  • Africa start-up funding deal flow and deal value rose strongly in 2021, but remain low in a global context

  • Nigeria, South Africa, Egypt and Kenya are the top recipients of VC funding. Fintech is the main sector of interest

  • Notable transactions include: Andela, Chipper Cash, Flutterwave, Jumo, MNT Halan, OPay, TradeDepot, TymeBank, Wave

Africa start-up funding more than doubled in 2021; 2022 could be even better
Rahul Shah
Rahul Shah

Head of Financials Equity Research

Rabail Adwani
Rohit Kumar
Tellimer Research
6 January 2022
Published byTellimer Research

African start-ups enjoyed a bumper year in 2021, but still lag the fund-raising capacity of their global emerging markets peers. We expect another strong year, given attractive relative valuations, and as investors gain a better understanding of the region's opportunities and risks. Fintechs should continue to feature strongly, given the continent's huge underbanked population.

Africa 2021 start-up funding

A strong year for African start-ups

Based on thebigdeal data, which tracks US$100k+ deals, there were 818 funding transactions in Africa in 2021, raising a combined US$4.3bn. Both numbers are well-up on prior years.

Africa 2021 start-up funding is well up on prior years

By geography, over 80% of funding was raised by start-ups in Nigeria, South Africa, Kenya and Egypt. 30 countries recorded at least one $100k+ transaction in the year.

Africa 2021 start-up funding mix

In terms of transaction size, there were 12 mega deals (US$100mn+) that raised a combined US$1.9bn (ie 44% of the total), plus a further 110 deals exceeding US$1mn, leaving around 700 transactions in the US$0.1mn-1mn bracket.

Africa 2021 start-up funding: smaller deals predominate

Fintechs garnered the most interest

Fintech was the largest recipient sector, with 53% of the total. The sector dominated the top transactions of the year (see Appendix). And Nigerian fintechs alone captured a fifth of the continent's funding, which attests to the massive financial inclusion opportunity in that country.

Africa's largest financial inclusion opportunities

The continent still lags in an emerging markets context

While the growth numbers are impressive, it is worth bearing in mind that African start-ups' fund-raising capacity still lags most other emerging markets (note that the Senegal data presented below was boosted by a single transaction, Wave). Barring a broader market downturn, we think it is likely that the 2021 numbers will get beaten this year; valuations in Africa remain attractive, and more VC investors are looking seriously at the continent than ever before (over 800 investors committed to at least one deal during the year).

VC funding per capita

2021 saw some new African unicorns emerge

2021 had a bumper crop of unicorns, their number almost doubled and now exceeds over 1,000 globally. But Africa is still very much under-represented, although its population rose from 1 to 6 during the year. We have previously written on OPay, Chipper Cash and Flutterwave.

Africa's unicorns

Appendix: Selected funding transactions of 2021

Selected Africa start-up funding deals of 2021