* Africa Tech Booms In 2021 With US$5.2B Raised In Equity, US$6B Including Growing Debt Deals

By Cyber Era Special Correspondent

Partech Africa has published its annual report on VC Funding for African Startups. In 2021, amid global VC growth, Africa tech still grew faster than any other region with two times (2x) the activity of last year and more than three times(3x) the amount invested, reaching US$5.2B.

A year of historic growth

681 rounds of equity fundraising brought in a total of US$5.2B. When we include debt, this total reaches US$6B in 724 rounds. The 2021 new record indicates a super-active ecosystem, where almost 3 deals are closed every weekday.

The number of deals almost doubled, increasing by 92 per cent YoY. This rate of growth makes Africa tech one of the fastest-growing ecosystems in the world. In 2021, it accelerated significantly, far surpassing the last 6 years of growth with a CAGR of 45 per cent.

Megadeals drove record levels of funding

2021 witnessed 14 Megadeals (above US$100M, equity only) coming from 12 companies. 48 per cent of total equity funding went to these Megadeals, i.e. US$2,47B. Before 2021, only 8 Megadeals had been recorded in the entire history of the African funding ecosystem. 2021 was the year US$100M+ funding rounds became normal with almost twice the number of Megadeals made in a single year as in the whole of the ecosystem’s history.

Increasing round sizes

The average round size increased across all stages, picking up again strongly after 2020’s downtrend. While Seed, Series A and B round sizes grew strongly, Growth deals saw an exceptional inflation of average round size at +426 per cent YoY, due to the surge in Megadeals at this stage.

As a result, average round sizes across all stages bounced back to above their pre-COVID levels, with strong recovery and continued growth across all VC market segments in Africa.

The rise of a new asset class: debt funding

37 African tech start-ups raised a total of US$767M in 43 debt rounds. As start-ups grow and achieve more predictability, debt financing becomes a useful instrument which helps accelerate growth, while limiting dilution from equity rounds. 2021 set real trends in this space, with strategic debt players launching dedicated debt funds targeted to emerging markets – Africa in particular. Nigerian start-ups raised almost half of the total amount of debt (US$345M), taking 45 per cent of the total debt raised.

Key facts:

•             Country breakdown: Nigeria is the undisputed leader in the Africa tech VC ecosystem, pulling ahead on both funding amount and number of equity rounds. While Nigeria is in a league of its own with US$1.8B, 34 per cent of all African equity funding, Egypt, South Africa and Kenya also attracted more than half a billion each. Senegal completes the top 5 as francophone Africa accelerates 2.6x faster than the continent, at 695 per cent YoY growth in amount invested.

•             Sector breakdown: Driven by Megadeals, Fintech accounted for only 32 per cent of deals, but a large majority (63%) of funding. Digitization of foundational sectors of the economy (Commerce, Education, Energy, Health, Logistics) meant each of these sectors broke into the $200M range.

•             Founder gender breakdown: Female-founded start-ups raised 20 per cent of all rounds in 2021, up 7 percentage points from 13 per cent in 2020. They took US$834M or 16 per cent of the total equity funding, up 2 percentage points from 14 per cent in 2020.

•             Investor breakdown: Africa’s tech ecosystem attracted 2x more investors in 2021 (+101% YoY) with 891 active investors. They showed more commitment to the market, with 268 involved in 2 or more deals (+144% YoY) and 65 involved in 5 or more (+195% YoY).

A stable methodology

The sixth Partech Africa annual report on African tech start-ups is based on the same methodology as the previous years: it covers equity deals in tech and digital spaces, and funding rounds higher than US$200K.