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Last year was record-breaking for African startups. I know I’m probably starting to sound like a broken record, but the astronomical growth is worth highlighting again and again.

In this piece, I spotlighted what influenced this venture capital growth — which, at the time, was pegged at a little over $4 billion. But similarly to years past, the total amount raised by African startups varies among different reports.

We first emphasized this issue in a 2019 piece: Did African startups raise $496M, $1B or $2B in 2019? Then, the disparities between venture funding studies were stunningly clear. 

The figures were closer together when we carried out another comparison in 2020, with each study reporting between $1.3 billion to $1.5 billion.

This year, we’ll be looking at figures from data-tracking publications: Briter Bridges, Partech and The Big Deal, and not media ones, for the sake of cohesiveness.

Methodologies

It’s important once again to underline that these deal-tracking publications use contrasting methodologies in their reports. From the type of deals reviewed to the definition of an African startup, each factor contributes to the disparities in numbers.

Briter Bridges, for instance, avoids using geography to define an African startup due to factors contributing to business identities like taxation, customers, IP and management team.

Partech Africa covers equity deals in tech and digital spaces and funding rounds higher than $200,000. It also defines African startups as companies with their primary market, in terms of operations or revenues, in Africa — not based on HQ or incorporation.

The Big Deal tracks funding rounds from $100,000 and above and doesn’t have a set definition of what makes up an African startup

How many deals and how much did African startups raise?

Briter Bridges: African startups raised $4.9 billion in total estimated funding — $4.65 billion disclosed and about $300 million undisclosed. It’s more than a 250% increase from last year’s total funding of $1.3 billion. This funding was raised from over 740 deals, up 25% from 2020.

Partech: $5.2 billion from 681 equity rounds, up 264% from 2020 figures of $1.4 billion. The firm said the number of deals it recorded almost doubled, increasing 92% year-over-year from 359 deals in 2020.

The Big Deal: $4.33 billion from 820 deals, up from 155% from 2020 numbers of $1.65 billion. The number of deals in 2021 grew 73% year-on-year from 244 deals in 2020.

Fintech and other sectors

A common theme in the three reports shows fintech leading the way, sector-wise.

Briter Bridges: In 2020, the publication reported that fintech companies accounted for 31% of the total VC funding. That number doubled to 62%. Other sectors include health tech (8%), logistics (7%), education (5%) and clean tech (5%).

Partech: According to Partech, fintech, as the top sector, represented 25% of total African funding raised in 2020. In 2021, fintech startups got 63% of the continent’s total investments. Completing the top five is logistics at 7%, edtech at 6%, e- and social commerce at 5%, and enterprise at 5%.

The Big Deal: African fintech startups received 53% of the total VC funding in 2021; it was 49% in 2020. According to the publication, the sectors making up the top five are energy, logistics/transport, retail, and education and jobs.

Nigeria and South Africa are in the top two; Egypt and Kenya switch

Like two years ago, 2021 showed the Big Four countries’ preponderance in terms of investment destination.

Briter Bridges: For its 2020 report, Briter Bridges chose to attribute funding to startups’ place of incorporation or headquarters. It was different from what other trackers used and it slightly altered the Big Four’s positions. But for its 2021 report, Briter Bridges reverted to the more generally accepted method of ascribing rounds to startups’ main offices in Africa.

The publication didn’t give specific numbers this time, but it said Nigeria, South Africa, Kenya, and Egypt received the most investments in that order.

Partech: Its 2020 report had Nigeria on top, with Kenya, Egypt and South Africa rounding up the top four. Ghana came fifth.

In 2021, Nigeria retained the first spot ($1.8 billion), South Africa was second ($832 million), Egypt came third ($652 million) and Kenya landed fourth ($571 million). Senegal took the fifth spot with $353 million, while Ghana was sixth ($167 million).

The Big Deal: Nigeria topped African VC investment destination at $1.5 billion, South Africa with $949 million, Egypt with $599 million, and Kenya with $411 million. Startups in Senegal received more than $222 million, placing the country in fifth.

More funding for female-founded startups, or not?

There’s never been a better year for female-led startups raising million-dollar rounds than in 2021. But unfortunately, their representation remains minute due to a faster-growing percentage of male-run startups.

Briter Bridges: In 2020, Briter reported that 15% of the funded startups had women as founders, co-founders or C-level executives.

What was that number in 2021? Briter doesn’t say, but it reveals more frightening stats that go almost a decade back: 3.2% of African VC total funding and 8.2% of deals have gone to all-female co-founded teams since it started keeping track in 2013.

Partech: The publication placed the percentage of investments raised by female-founded startups at 14% in 2020. That number slightly increased to 16%, while equity deals stood at 20%.

The Big Deal: According to the publication, female-founded startups received 18% of African VC funding. When narrowed down to just all-female founders, the number is 1%.

Mega-rounds chaos

The 2021 influx of cash created a record year for mega-rounds — deals that equal or exceed $100 million. They shoulder much of the investment raised on the continent. Still, despite their appeal, some of these rounds contribute to the distortion in end-of-year reports because of how these publications interpret their operations in Africa.

Briter Bridges: 55% of total funding in 2021 came from 13 mega deals. They include OPay, Chipper Cash, JUMO, Tala, TymeBank, MFS Africa, MNT-Halan, Wave, Zepz, Zipline, Andela, Flutterwave and TradeDepot.

Partech: 48% of total equity funding went to 14 megadeals from 12 companies. They include OPay, Zepz, Zipline, Andela, Wave, Flutterwave, Chipper Cash (x2), Tala, MNT-Halan, JUMO, TymeBank, PalmPay and an undisclosed round from one of these companies.

Some tech insiders don’t view companies such as Zepz, Zipline or Tala as African companies — some see them as international companies headquartered in the U.S. or the U.K. with Africa as one of their markets, unlike other companies that are headquartered in Africa or both Africa and the U.S.

Should their rounds be excluded from the reports, venture capital in African startups conservatively falls between $4 billion and $4.5 billion. If included, it touches $5 billion. Whatever the case, 2021 was a record-shattering year.

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