Despite seeing its share of Africa start-up funding fall from 48.3% seen in 2021 to 43.4% in 2022, fintech managed to raise 39.3% more capital in 2022 ($1.45bn) than in 2021 ($1.04 billion). Nigeria was once again the best-funded country after 180 of its startups raised a combined total of $976,146,000 or 29.3% of the total for the African continent.
Big Four Stocks Fall
According to Disrupt’s 2022 African Tech Startup Funding Report, fintech startups were able to secure $1.45 billion in funding last year. The sector’s total capital increase represented a 39.3% increase from the approximately $1.04 billion raised in 2021. Despite this increase in overall fintech funding, the sector’s share of total capital Raised by African tech startups still declined from 48.3% seen in 2021 to 43.4% in 2022.
As was the case in 2021, Nigeria is once again the best-funded country after 180 of its startups raised a combined total of $976,146,000 or 29.3% of the total for the African continent. Both the number of new companies funded from the West African nation and its share of the continent’s total dwarf those of Egypt, Kenya and South Africa.
Furthermore, according to the report, while 2022 was a record year of funding for countries like Ghana and Tunisia, the continent’s so-called big four, namely Egypt, Kenya, Nigeria and South Africa, again accounted for a disproportionate share. of financing fintech companies on the continent. However, the study data appears to point to more evenly distributed seed funding in the future.
“While in 2021, 80.1% of financed companies came from Egypt, Kenya, Nigeria or South Africa, in 2022 it dropped to 75.8%. Meanwhile, the proportion of total funding raised by these markets is also declining. In 2022, ‘big four’ startups raised 80.8% of the annual total, up from 92.1% in 2021,” the Disrupt report states.
Debt financing, the least preferred form of financing
Regarding the most popular funding methods, the report says that of the 310 funding rounds disclosed, more than 70% of these “were in the seed and pre-seed stage.” On the other hand, the number of startups that disclosed Series B financing or higher only represented less than 5% of the total.
Meanwhile, the study’s findings suggest that debt financing is the least favored funding method with just 33 out of a total of 633 startups disclosing a “debt element as part of any of their rounds.” While this total is marginally higher than the 26 seen in 2021, according to the report, such a meager number could mean that companies are still “much more likely to raise equity capital” than debt capital.
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