Africa tech investment holds steady in 2020, despite Covid-19

African startups received $2.44bn in investment in 2020 – only around $100m less than the year before Covid-19, according to a recent report by research firm Briter Bridges, writes Tom Collins.

Using data from more than 70 investors, the Africa Investment Report 2020 recorded 1,075 deals, compared with 1,119 in 2019.

The most funded sectors were fintech (33%) and cleantech (22%), the latter an umbrella term that encompasses green, sustainable and environmentally friendly technologies.

They were followed by health (9%), agriculture (7%) and data & analytics (7%).

As the pandemic wrought economic devastation across the globe, the UN Economic Commission for Africa warned that the impact on remittances and tourism would hit FDI flows and result in capital flight and a slowdown in investment.

But the latest figures dispel fears that the pandemic would see investors withhold capital and funds would dry up.

On the contrary, there were some huge deals in 2020 and a string of high-profile acquisitions, especially in the tech and agricultural sectors. Payments platforms, often boosted by governmentmandated moves toward digital spending, witnessed a flurry of activity.

US fintech Stripe acquired Nigeria’s Paystack for over $200m, while UK-based payments company Network International bought Kenya’s DPO Group for $288m and African-inspired WorldRemit acquired remittances company Send Wave for $500m.

The value of the disclosed M&A market was at least $1.12bn in 2020, the report says.

In terms of successful fundraising rounds, Estonian ride-hailing app Bolt raised $182m to expand its services in Europe and Africa.

Kenya’s food-distribution startup Twiga Foods raised $30m in a Series B round led by Goldman Sachs. Egyptbased health-tech Veezeta raised $40m from several Gulf funds to expand its services in the MENA region.

The total value raised during all rounds came to $1.07bn with an extra $243m in undisclosed deals. All the rounds over $100m involved foreign companies investing in Africa.

Though deals took a nosedive at the onset of the pandemic in March, they recovered in July and August, tailing off again towards the end of the year.

The report found that there were more than 1,800 co-founders involved in raising money, of whom 85% were male and 15% female.

The most funded products were in solar energy, data and analytics, PAYG, payments, transfers and remittances, financial API, telemedicine, supply chain management, insurance and digital banking.

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