Tech startups based in and outside Africa with a majority client/customer base in the continent raised over R4 billion ($366.8 million) in vnture capital funding last year.
This is according to a report by US venture capital firm, Partech Ventures, which has been tracking the dynamics of African tech investment over the past three years to better understand the investment landscape on the continent.
Partech’s analysis is based on market research, publicly available data and its trusted relationships within the tech ecosphere.
It’s research showed that 77 Africa-focused startups raised R366.8 million in seed to growth stage VC funding in 2016, compared to $276.5 million in 2015, a +33% growth year-on-year.
The largest round of funding was $40 million.
The numbers only include deals higher than $200 000 and exclude “megadeals” higher than $ 100 million. They also exclude any grant or debt deals.
For startups with local presence in more than one African country, only one primary country of operation has been identified and that is where the investment is counted.
“Looking at it from a stage-angle, the African tech investment keeps growing very fast with a distributed growth across all round types. Deep diving into round size, the average size in Africa for seed round was $0.83 million in 2016 with 38 transactions,” Partech said.
Nigeria led the funding race absorbing 30% of the total investment ($109 million), while Francophone Africa kept rising up with 10% ($37 million).
The geographic distribution is still focused on top three markets:
- 1) Nigeria with $109 million in funding (29.8% of total investment)
- 2) South Africa with $96 million (26.4% of total)
- 3) Kenya with $92 million (25.3% of total).
These top three investment destinations still account for 79.4% of the continent’s total funding.
In terms of deals, South Africa saw the highest number of deals with 28 transactions (36.4% of total transaction), followed by Kenya with 21 deals (27.3% of total) and Nigeria with 13 deals (16.9% of total).
Financial Inclusion and Consumer Services segments draw most of the investment;
1. Financial Inclusion accounted for 56.2% of the total investment with $206.3 million across 28 transactions. This goes into Off-Grid Tech (36.6%), FinTech (19%) and InsurTech (0.6%).
2. Online and Mobile Consumer Services accounted for 40.5% with $148.5 million across 36 transactions. This goes into eCommerce (16.5%), EdTech (8%), Shared Economy (7.6%), Entertainment (5.5%), HealthTech (2.5%) and Personal Services (0.4%).
3. Tech Adoption accounted for 3.3% of the total investment with $12 million across 13 transactions. This goes into Enterprise (1.8%), Hi-Tech (0.9%) and Connectivity (0.6%).