Business a.m.

African Startups raise $940m in H1’21

On a trajectory to meet $2bn startup fund in 2021

- Zainab Iwayemi

Data collected by Briter Bridges shows that African startups have raised $940 million since January 1st, 2021. While the report depicts that Africa has started the year on a good note for tech deals and implies that this year is expected to outperform both 2020 and 2019, it may be a pointer to reports which was earlier projected to raise over $2 billion this year depending on the recovery from Covid-19 which is testing many countries in the form of a third wave.

The startup deals in six months

Kenya-based Damu Sasa working to solve the challenges within the human blood supply chain by providing a cloud-based, end-to-end blood services informatio­n management system, raised $50,000 in June from India-founded Villgro Africa which was launched in 2017 with the aim to support ehealth startups across Africa. This amount is in addition to the $20,000 it received from Villgro Africa in December to help Damu Sasa mitigate the spread of Covid-19.

Gro Intelligen­ce, a Nairobi-founded data analytics company raised $85 million in a Series B funding round co-led by Intel Capital, Africa Internet Venture and American investment giants; Ronald Lauder and Erric Zinterhofe­r. With headquarte­red based in the New York, it uses over 650 trillion data points to provide insight into the cross-sections between food, climate and agricultur­e.

Angola-based crowdfundi­ng platform, Diya also raised $50,000 in pre-seed funding to help it scale and begin generating revenue. with $22,000 generated so far, it hopes to bring together fund-raisers and donors on its platform for social impact causes.

Nigerian Kuda, the first mobileonly bank raised $25 million in a Series A round led by Valar Ventures. This is in addition to the $10 million facilitate­d by Kuda and backed by PayPal co-founder, Peter Thiel with Participat­ion from Target Global in November 2020, making Kuda the largest seed round in Africa. Consequent­ly, the mobile bank customers have increased from 300,000 to 650,000 in between funding rounds as transactio­ns also increased to $2.2 billion in February 2020.

Over the past few years, Nigeria has surged ahead as the African country with the biggest and most well-known startups yet, a number of founders in the country always have a complicate­d relationsh­ip with national regulators as authoritie­s have the tendency to spook investors.

The most recent case is the Twitter ban by the government which sent shockwaves through the internatio­nal community. Analysts have said this will have a negative impact on investor confidence in the tech sector.

In addition to serving as a marketplac­e for thousands of small businesses that were immediatel­y put out of business by the ban, The social media platform has been a medium of convergenc­e as It was a key element of last year’s #EndSARS protests. Hence, like citizens in Uganda, where the government implemente­d a social media tax, lots of Nigerians have taken to Tweet by using VPN.

Meanwhile, Egypt’s tech space, often overlooked has grown rapidly as one of Africa’s most vibrant startup markets. From January to date, more than 50 deals have already been announced by Egyptian startups even though there was a slight dip recorded in February and March and steadily increasing since April

Led by Dubai-based VC firm, Global Venture with participat­ion from Egyptian investment fund, A15 and Dutch developmen­t bank, FMO, fintech startup Paymob has raised $18.5 million in a Series A round, in the largest equity round seen in Egypt yet. Since founded in 2015, the startup has been helping to facilitate online and offline payment between merchants and customers.

Why is Egypt successful

With e-commerce and fintech accounting for the most popular sectors, more than 500 startups operate across sectors such as healthcare, education, media, e-commerce and entertainm­ent. However, the largest raises this year include $18.5m from fintech Paymob and $42m from Egyptian trucking startup Trella.

While the success in Egypt is associated with the highly educated domestic workforce on the back of good quality higher education facilities, the market size of around 110 million people also provides startups with an easy route to scale.

In addition, Egypt is also well connected to MENA/Gulf funds and investors that provides a readily available pool of capital as many of Egypt’s startups branch out into Gulf markets after establishi­ng themselves at home. Importantl­y, there are more than 150 investors that are focused on the North African country from regions in Asia, Europe and North America.

While Egypt boasts of large accelerato­rs, incubators and angel investors, this guarantees the availabili­ty of ample help for startups looking to get off the ground in terms of both technical training and seed money. In addition to foreign capital, the country also has plenty of its own venture capitalist that inject VC money to take companies to the next level.

Notably, Egyptian growth story is attractive to investors. Growing steadily since 2014, the country is projected to be the seventh-largest economy in the world by 2030, surpassing Russia, Japan and Germany. In the tech space, it already boasts one unicorn. However, the payments company Fawry, and more are expected to follow.

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