Nigerian startups retain $1.37bn of Africa’s $4b funding in 2021

Out of about $4 billion startup funding that Africa, especially attracted in 2021, Nigeria earned the largest, chunk of $1.37 billion.

Expectedly, four countries—Nigeria, South Africa, Egypt and Kenya, emerged at the top. They accounted for 80 per cent of the total amount raised on the continent up until the end of November, with 35 per cent of capital raised in Nigeria alone.

New data from “Africa: The Big Deal,” broke down the total funding raised by startups in Africa for deals worth $100, 000 or more.

While Nigerian startups raised$1.37 billion in 2021, South Africa raised $838 million; Egypt, $588 million and Kenya, $375 million. Nigeria boasts of over 200 deals for the year and the other three countries, over 100 deals each.

Other mentions were Senegal, where startups raised $222 million in 2021 and Tanzania at $96 million.

One of the biggest success stories was Chipper Cash, which raised a total of $250 million this year. The authors, Max Cuvellier and Maxime Bayen decided not to pin the raise to Ghana, saying the startup’s Ghanaian and Ugandan co-founders and its African HQs split between Ghana and Kenya “make it quite pan-African”.

Without Chipper Cash, Ghana raised $48 million in 2021; Algeria $30million; Morocco $29 million; Tunisia $23 million; Uganda $18 million; Rwanda$16 million; Democratic Republic of Congo $12 million and Cameroon $11 million.

The report revealed that the dominance of male-led and male-founded start-ups in South Africa and Nigeria was aligned with the rest of the continent. Over the 2019-2021YTDperiod, 92 per cent of over $1 million deals (93 per cent in value) were signed by male CEOs; 80 per cent of such deals (85 per cent in value) were secured by all-male founding teams, that is, male single founders and male-only founding teams.

The Guardian had reported in October, how Fintechs in the country shunned the Nigerian stock exchange for $876.5m funding overseas in the last six years. They approached venture capitalists (VC) in countries such as the United States, United Kingdom, Switzerland and Belgium.

From 2014 to 2020, for instance, Fintechs raised about $600 million in funding, attracting 25 per cent($122 million) of the $491.6 million raised by African tech startups in 2019 alone – second only to Kenya, which attracted $149 million.

McKinsey’s “Harnessing Nigeria’s Fintech Potential,” confirmed these statistics. Besides, fund announcement analysis by TechCrunch and TechCabal revealed that Nigerian startups raised $276.5 million in the first seven months of 2021.

The analysis revealed that Fintechs accounted for 95.95 per cent of the amount raised within this period, with Flutter wave’s $170 million accounting for a large chunk of this. Edutech, health tech and communications tech accounted for 4.05 per cent of the amount raised.

MEANWHILE, Vice President Yemi Osinbajo has stated that there is a need for the Nigerian Exchange Limited (NGX) to woo Fintech firms raising capital beyond the shores of the country to the nation’s bourse to deepen the market.

Osinbajo, who spoke at the 2021 Capital Market Conference, held in Abuja, expressed concerns about the inability of Fintech companies and start-ups to access funds from the capital market.

He said the sustainability of Nigeria’s Fintech ecosystem would require existing and emerging financial services startups to have access to the capital market.

According to him, attracting the fintech unicorns to the market as a viable option for capital raising would give more investors the opportunity to benefit from the growth of these companies and create wealth for the economy.

He said Nigeria needs to develop robust venture capital and private equity funds to support small businesses that have significant growth potential.