Connecting Africa is part of the Informa Tech Division of Informa PLC

This site is operated by a business or businesses owned by Informa PLC and all copyright resides with them. Informa PLC's registered office is 5 Howick Place, London SW1P 1WG. Registered in England and Wales. Number 3099067.

Innovation Hub

The state of funding for Africa's tech startups

Article Image
Investor interest in Africa remained strong in 2020, despite the impact of the global pandemic, and African startups received over $1 billion again, after breaking the billion-dollar barrier in 2019 for the first time.

This is according to the Briter Bridges Africa's Investment Report 2020, which explores funding activity across the continent's tech and innovation scene.

The estimated value of disclosed funding in Africa was at least $1.07 billion, but that excludes acquisitions. If you add in the estimated undisclosed funding, of at least $243 million, the total is around $1.3 billion.

The estimated value of the disclosed mergers and acquisitions (M&A) market was at least $1.12 billion and fintech startups accounted for over nine-tenths of total M&A volumes. Overall, about $2.4 billion in capital deployed and acquisition value was recorded across Africa in 2020.

The disclosed funding amount was down a bit from 2019's figure of $1.1 billion, probably because of the COVID-19 pandemic impact, but still a big jump from 2018's $669 million invested.

Funding History

In 2020, investments slowed down in Q1 and Q2, likely due to the spread of COVID-19 and the introduction of the first wave of restrictions and lockdowns. But investments picked up again in July and August.

"The top 10 deals by size in 2020 accounted for over 50% of the $1.3 billion deployed into ventures across the continent in 2020 (including disclosed and undisclosed deals), while over 30% of companies funded are incorporated in the United States," said Briter Bridges director Dario Giuliani.

The report was written in collaboration with Africa's investor community and had participation from over 70 funds, institutions and syndicates, who provided insights into their portfolios, theses and pipeline, he said.

Fintech dominates

The report found that despite steady investment growth over the past decade, the funding landscape remains heavily skewed toward a limited number of sectors, which represent over 75% of funding recipients.

Fintechs accounted for over nine-tenths of total M&A volumes, with high-profile acquisitions such as Paystack, DPO Group and Wave, and over a third of all non-acquisition funds deployed.

While financial technology companies retain the lion's share of total funding (31%), cleantech (22%) is increasingly attracting capital from local and international investors, including a growing number of corporates interested in fast-tracking their transition to renewable energy.

Healthtech (9%), data and analytics (7%), agritech (7%) and e-commerce (5%) follow as more private companies reach maturity, but ticket sizes remain contained compared to those across fintech and cleantech, the report said.

Funding by Industry

When you look at the most funded products during the year the one that received most of the funding was solar energy ($137 million). This was followed by data and analytics ($98 million); PAYG ($93 million); payments ($61 million); transfers and remittances ($59 million); financial API ($57 million); telemedicine ($43 million); supply chain management ($34 million); insurance ($33 million); and digital banking ($30 million).

In 2020, there were 869 co-founding members that raised funding within their company, but a gender disparity remains and across the teams, only 17.4% were female.

Pandemic perils

COVID-19 negatively impacted several industries and triggered major market uncertainty. As a result, forecasts anticipated significant slow-downs in the investment activity across the continent.

"By forcing businesses to pivot and see their model drastically adjusted in order to survive, the pandemic created the conditions for a generalised questioning of risk frameworks," said Giuliani.

"Yet, the many conversations with private and institutional investors, which our team enjoyed throughout 2020, highlighted that funding mandates and activities hardly ever ceased but, if ever, they were temporarily paused to allow investors to focus on existing portfolios or adjust due diligence procedures to 'the new normal'," he said.

In addition, the blossoming early-stage support ecosystem, made of accelerators, venture builders, angel investor syndicates and emerging seed funds, continued bridging the persisting early stage funding gap.

"As markets keep growing steadily, propelled by an increasing interest from investors, corporates, academia, and public institutions, the diversity and energy which have been defining Africa's innovative ecosystems throughout the 2010s seem to suggest that a gradual path to sophistication and maturity is laid ahead," Giuliani concluded.

Related posts:

*all infographics courtesy of Briter Bridges Africa's Investment Report 2020.

— Paula Gilbert, Editor, Connecting Africa

Innovation hub

New develoPPP Ventures funding program for SA startups

The Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) has launched develoPPP Ventures, a new funding scheme offering up to €100,000 (US$106,950) for successful startups in South Africa.


Huawei using SA data centers to extend AI cloud adoption

Chinese multinational Huawei is using its three data centers in South Africa to extend artificial intelligence (AI) cloud adoption in the country.

More Innovation hub

Latest video

More videos

Partner perspectives

All Partner Perspectives

Sponsored video

More videos

Follow us on X

Industry announcements

More Industry announcements

Upcoming events

Cyber Revolution Summit
August 9, 2024
Gaborone, Botswana
Africa Tech Festival 2024
November 11-14, 2024
Cape Town, South Africa
More Upcoming events

Africa Tech Perspectives


Uber's Marjorie Saint-Lot on inclusion and sustainability in Africa

Uber's Country Manager for Ghana and Cote d'Ivoire, Marjorie Saint-Lot, shares how the ride-hailing company is approaching public-private partnerships, environmentally friendly initiatives and gender inclusion in Africa.


The 100 most influential African leaders in 2023

A new report from Africa Tech Festival and Connecting Africa puts a spotlight on the top 100 African leaders in the telecoms and technology sector in 2023.


Deep dive into East Africa's tech startup ecosystem

New survey reveals a lack of access to investors, reliance on international VCs and global recession trends as the biggest barriers for East African tech startups to access funds.

More Africa Tech perspectives

Guest Perspectives


Omdia View: May 2024

By Omdia Analysts

May 2024's telecoms highlights in the Middle East and Africa included African 5G subscriptions surpassing 5 million, growth from SpaceX's satellite Internet service Starlink, and a major fiber partnership in the Middle East and North Africa.


How e-mobility could transform Africa's transport sector

By Francis Hook

ICT analyst Francis Hook delves into Africa's e-mobility sector and unpacks the challenges faced locally and the benefits the move to electric vehicles could bring to urban transport systems.

More Guest Perspectives

Like us on Facebook

Newsletter Sign Up

Sign Up
Tag id test-002