African startups raised a record $5.2 billion in venture capital last year, says industry group

JOHANNESBURG, April 18 (Reuters) – African startups attracted a record $5.2 billion in venture capital last year, recovering from a pandemic-induced slump in 2020 with a nearly five-fold increase in investments, according to data published by an industry. group on Tuesday.

The success of companies like Nigeria’s Paystack, acquired in 2020 by US payments firm Stripe, and its fintech peer Flutterwave, valued at more than $3 billion, has fueled international interest in startups from the continent. read more

“African startups raised more in 2021 alone than in the previous seven years combined,” the African Private Equity and Venture Capital Association (AVCA), which promotes private investment on the continent, wrote in a report.

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Much of the investor focus has been on fintech startups looking to serve the needs of the continent’s largely unbanked population. Data compiled by AVCA showed that the financial sector accounted for 60% of investments by value and nearly a third of transactions by volume.

Nigeria, a hotbed of fintech startups, was Africa’s top venture capital destination last year, overtaking South Africa, the continent’s most developed economy.

Most venture capital deals focused on early-stage funding rounds. However, late-stage funding skyrocketed in 2021, including a nearly 40-fold increase in funding raised by Series C fundraising rounds.

Fintechs Chipper Cash, MFS Africa, Yoco and OPay together raised $833 million through Series C funding rounds.

While deals under $1 million accounted for nearly a third of deals by volume, those worth more than $50 million accounted for 62% of the total value of venture capital funding in Africa last year.

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Information from Joe Bavaria; Edited by Pravin Char

Our standards: the Thomson Reuters Trust Principles.

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