- 347 African tech start-ups raised a total of US$ 1.43 Billion in 359 equity rounds.
- Nigeria remains the leader with US$ 307 million invested.
- Female-founded startups raised 13% of the rounds in 2020
- Fintech is the first in total equity funding, with 25% of total amounts
Partech Africa has published its 2020 annual report on VC Funding for African Startups.
According to the report, it appears that, in the middle of the global pandemic, the African tech ecosystem is still growing fast, with more deals closed, and is getting a boost from the accelerated digitalization of foundational economic sectors.
More equity rounds in a challenging year
In 2020, more startups have closed deals than in any previous year: 359 deals were closed by 347 startups, compared with 250 rounds in 2019, i.e., a +44% growth YoY. Another very positive signal is the number of seed deals which massively accelerated, reaching 228 deals (+80% YoY).
Venture stages (Series A & B) are continuing to grow (+11% deals YoY) despite a general erosion of round sizes. The growth stage sees a low deal count and a marked drop in ticket size (-60% YoY).
The effects of the global crisis
Despite the strong growth in activity, the total amount raised by African startups decreased for the first time after nearly a decade of growth: the equity funding raised by African startups in 2020 totaled US$ 1.429 Billion, representing a -29% drop YoY.
Another effect of the crisis was the drop in the average deal size of African VC tech equity deals. The absence of mega-rounds explains to a great extent the drop in funding amount.
The monthly breakdown shows that there was no clear and significant impact on activity level attributable to the crisis and, in fact, every month of 2020 saw more deals closed than the same month in 2019.
A resilient ecosystem that already creates value
Investors may have slowed down their processes, and founders delayed their rounds for better times, but the ecosystem still benefitted from a boost and acceleration of digitalization of key economic sectors, such as Agriculture, Logistics & Mobility, Offgrid Energy, and Healthcare.
Key facts:
- Country breakdown: Nigeria remains the leader with US$ 307 million invested, while Egypt is first in equity deal count with 86 deals: an +83% growth YoY. 4 countries attracted 80% of the volume invested but 26 countries in total have attracted capital.
- Sector breakdown: Fintech is the first in total equity funding, with 25% of total amounts, but the highlight is the digital transformation of key economic sectors with Agritech (US$ 179 Million), Logistics & Mobility (US$ 157 Million), Offgridtech (US$ 148 Million) and Healthtech (US$ 141 Million).
- Founder gender breakdown: Female-founded startups raised 13% of the rounds in 2020 – 4 points down from 17% in 2019 – but they accounted for 14% of the total equity funding, just above 13% in 2019 (+8% YoY).
- Investor breakdown: Africa’s tech ecosystem is not only attracting more investors (+24% YoY), but they are also more committed to the market, with 108 of them involved in 2 or more deals, and 22 very active in 5+ deals.
A stable methodology
The fifth 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.
Click here for the full report.
