African Startups reportedly raised record-breaking $5B in 2021

Last year was a big break for African startups from a previous $4 billion revenue growth in 2020 to $5 billion.

The African tech ecosystem came into limelight on the global platform in 2020, attracting the attention of global investors from all over. The investments jumped the revenue growth of African startups to $2 billion, a big break at the time.  The year wasn’t so much of a bad year for African startups following the unfortunate events of the pandemic that broke out two months into the year. Many investors sought new ways to diversify their portfolios and still carry out transactions both locally and internationally. Some African startups like Stripe, Paystack and WorldRemit-Sendwave raised nearly $1.5 billion from investments.

The numbers stepped up by 2021 hitting bullish levels, following the reopening of businesses globally. The pandemic caused people to adopt new working, investing, and spending habits. Popularity in e-commerce, online delivery, e-learning, work-from-home, and venture capital has driven more demand for fintech services.

Tech ecosystem accelerator AfricArena predicted how much African startups would generate by December. It expected all pending deals to close between $2.25 billion and $2.8 billion. Co-founder and partner of DFS Lab, an investing firm focused on digital commerce startups, in 2016, compared Southeast Asia funding landscape to where Africa might be five years later, at $3 billion, according to TechCrunch.

On the contrary, African tech raised over $4 billion in 2021 – double of what they generated in 2019 and 2020. Other reports hold different amounts, but for the sake of cohesion, TechCrunch compared figures from Briter Bridges, Partech, and The Big Deal.

Briter Bridges does not use geography to define African startup due to certain factors that make up business identities like customers, IP, taxation and management team. According to Briter Bridges, African startups raised $4.9 billion in total estimated funding, with $4.65 billion disclosed and $300 million undisclosed. It is over a 250% increase from the previous year’s total funding of $1.3 billion, up 25%.

Partech evaluates equity deals in technology and digital spaces, and funding rounds over $200,000. It defines African start up in their primary markets, in terms of revenues and operations within Africa, excluding those with headquarters outside Africa. Partech calculated $5.2 billion from 681 rounds, up 264% from $1.4 billion in 2020. It said the number of deals recorded almost doubled 92% year-over-year from 359 deals in the previous year.

The Big deal covers funding rounds from $100,000 and above for startups with operations within and outside Africa, but the founders must be from Africa. The firm reported $4.33 billion from 820 deals 155% up from $1.65 billion in 2020. The 2021 deals grew 73% year-on-year from 244 deals in 2020.