Nigeria is the clear leader for African startup funding, yet a trickle-down is happening

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Nigeria confirmed itself as the leading destination for African tech startup funding over the course of a record-breaking 2022, yet there is evidence of a trickle-down effect as more startups from more countries than ever before secured investment.

This is according to the eighth edition of the annual African Tech Startups Funding Report released by startup news and research portal Disrupt Africa, which is available free to all as part of an open-sourcing initiative in partnership with Flat6Labs, MarketForce, 4Di Capital, Mercy Corps Ventures, Newtown Partners, and InsiderPR.

The report tells the story of an impressive 2022 in which more startups raised more funding than ever before, in spite of a global downturn in investments. In all, 633 startups raised a combined US$3,333,071,000 in 2022. This represented incredible growth. The number of funded startups increased by 12.2 per cent on 564 in 2021, while the total secured funding jumped 55.1 per cent on US$2,148,517,500 in 2021. 

Nigeria leads the way

Nigeria was the best-funded country in Africa for the second year running in 2022, and also had the most funded startups. The country saw 180 startups (28.4 per cent of Africa’s funded ventures) raise a combined US$976,146,000 (29.3 per cent of the continent’s total) – substantially ahead of all other countries on both counts.

In 2022, the number of startups to raise in Nigeria was up 11.8 per cent on 2021; and the total amount of funding was up eight per cent. This was, however, slower growth than seen previously. 2021’s results saw the number of startups funded rise by 89.4 per cent on 2020, and the total funding increase 501 per cent.  

Fintech company Flutterwave (US$250 million), mobility fintech startup Moove (US$181.8 million), agri-tech platform ThriveAgric (US$56.4 million), cryptocurrency exchange Yellow Card (US$40 million) and restaurant-tech platform Vendease (US$30 million) were the biggest raisers.

Fintech once again dominated the Nigerian market in 2022, accounting for almost half the country’s funded ventures (86, 47.8%) and over half its funds (US$536,655,000, 59.4%). Home to the likes of Interswitch, Paga, Flutterwave and Kuda, Nigeria has forged a reputation for itself in the fintech space over the years, and continues to produce quality innovations in this sector.

Egypt further establishes itself as major tech ecosystem

Egypt has enjoyed a meteoric rise in the funding stakes in the past couple of years, and in 2022 it held on to second position both in terms of number of funded startups and total amount secured.

The country saw 131 startups (20.7 per cent of Africa’s total) raise a combined US$811,945,000 (24.4 per cent of continent’s total) – figures placing Egypt comfortably ahead of all other countries save Nigeria.

These numbers continue Egypt’s recent stellar performance which began in earnest in 2019 when it recorded the highest number of funded startups, alongside a jump in funding as compared to its own previous figures. Since then, the country has shot further up the rankings, initially bringing in the continent’s fourth largest sums for a couple of years, before settling in second place in 2021 and retaining this spot again in 2022.

The US$811,945,000 raised in 2022 was up 82.15 per cent on the US$445,842,000 recorded in 2021; which in turn was an increase of 215 per cent on the 2020 total of US$141,397,000. That was a 65 per cent hike on US$85,614,000 in 2019. The growth trajectory has been impressive.

Kenya and SA complete “big four”

There are two other established members of Africa’s “big four” startup ecosystems. Kenya had a strong year in 2022, placing it firmly in third position both for number of funded startups and for total amount of funding.  

Ninety-one startups were backed in Kenya (14.4 per cent of Africa’s total), and combined they secured US$574,809,000 – 17.2 per cent of the continent’s funding. The total amount of funding Kenyan startups secure yearly is snowballing. The US$574,809,000 raised in 2022 was up 96.9 per cent on the 2021 total of US$291,983,000. That in turn was up 52.6 per cent on the year before (US$191,381,000); and 2020’s total was 28.3 per cent higher than the preceding year. 

Once the wonder child of African startup funding, meanwhile, South Africa declined year-on-year, both in the number of startups receiving investment, and in the total amount of funding raised.

Seventy-eight startups secured backing in 2022 (12.3 per cent of Africa’s funded ventures), together raising US$329,707,000 (9.9 per cent of Africa’s total). These statistics see South Africa fall to fourth position on both measures.

Funding activity increases continent-wide

The “big four” may be clear leaders, but increasingly funding is becoming more distributed. Startups raised funding in 27 African countries in 2022, more so than ever before. Each year there are more startups in more markets securing backing, as investors grow in their confidence in Africa, and as local investors get the ball rolling in new ecosystems.

The “big four” markets are seeing their share decline year-on-year, as the rest of Africa takes on a more active role in the funding landscape. In 2022, 480 funded startups (75.8%) were based in the big four countries. This is down from 80.1% in 2021.

The proportion of total funding contributed by the big four markets is also decreasing. In 2022, startups based in Egypt, Kenya, Nigeria and South Africa raised a combined US$2,692,607,000 – 80.8 per cent of the US$3,333,071,000 annual total. This percentage is far down from 2021, when the big four’s share was a bumper 92.1 per cent. 

Ghana, Tunisia and Morocco are the leading “tier two” ecosystems from a funding perspective, while 2022 also saw impressive growth in markets such as Uganda, Tanzania, Ivory Coast, and Senegal.

For more information, or to download the report, please visit disrupt-africa.com/funding-report, or email Gabriella on gabriella@disrupt-africa.com, or Tom on tom@disrupt-africa.com.

About Disrupt Africa

Disrupt Africa is the one-stop-shop for all news, information and commentary pertaining to the continent’s tech startup – and investment – ecosystem. With journalists roaming the continent to find, meet, and interview the most innovative and disruptive tech startups, Disrupt Africa is a true showcase of Africa’s most promising businesses and business ideas. Its research arm releases in-depth reports on various aspects of the African tech startup ecosystem. Details here.

About Flat6Labs

Flat6Labs is the MENA region’s leading seed and early stage venture capital firm, currently running the most renowned startup programs in the region. Flat6Labs invests in innovative and technology-driven startups, enabling thousands of passionate entrepreneurs to achieve their daring ambitions and ultimately becoming their institutional co-founders. Launched and headquartered in Cairo since 2011, Flat6Labs has multiple offices across the region; with ongoing plans to expand into other emerging markets. 

About MarketForce

MarketForce is a pan-African technology company that is building the super app for Africa’s 100 million merchants. Launched in 2019, MarketForce is a fast-growing YC-backed company running an asset-light business model. Having raised the largest Series A round in East and Central Africa in 2022, MarketForce is now operational in five markets in Sub-Saharan Africa (Kenya, Uganda, Tanzania, Rwanda, and Nigeria), and has over 200,000 merchants and nearly 200 consumer brands trading on its platform. 

About 4Di Capital

4Di Capital is an independent venture capital fund manager based in South Africa’s “Silicon Cape”, specialising in high-growth technology venture opportunities, at the seed, early-and growth-funding stages.

About Mercy Corps Ventures

Mercy Corps Ventures invests in and catalyses venture-led solutions to increase the resilience of underserved individuals and communities. Founded in 2015 as the impact investing arm of global development agency, Mercy Corps, we’ve supported 41 early-stage ventures to scale and raise over US$333.9 million in follow-on capital. Our portfolio is 51 per cent female-founded and centres around resilience-building solutions in adaptive agriculture and food systems, frontier fintech, and climate smart systems, so that those living in frontier markets can withstand disruption and plan for the future. Through capital and support, piloting new approaches, action-oriented insights, and rigorously managing impact, we catalyse the ecosystem toward smarter, more impactful investments.

About Newtown Partners

Newtown Partners (newtownpartners.com) is the family office of successful startup entrepreneurs, Llew Claasen and Vinny Lingham. It invests across a range of alternative and traditional asset classes, especially early-stage venture capital to back startups utilising emerging technologies and disruptive business models. Since 2019, it has worked with pan-African and European logistics player, Imperial (a DP World company) to enable their corporate venture capital programme. Newtown Partners operates out of offices in San Diego, U.S. and Cape Town, South Africa.

About InsiderPR 

InsiderPR is a leading emerging market public relations firm helping visionary founders and investors across Africa and the Middle East tell their stories to the world. Using our “no-fluff” Write-Speak-Meet model, Insider has helped shape the narrative and increase the public profile of over 125 of the world’s leading emerging market companies, including Flutterwave (YC ‘16) and Swvl (NASDAQ-listed), as well as venture capital firms, funds, and government agencies. Our US and Africa-based team provides strategic communications advisory around the clock focusing on thought leadership.

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Passionate about the vibrant tech startups scene in Africa, Tom can usually be found sniffing out the continent's most exciting new companies and entrepreneurs, funding rounds and any other developments within the growing ecosystem.

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