Report Says African Startups Raised $2.7 Billion In VC Funding In The Last Two Years

Fintech startups operating in Africa have raised over $2.7 billion worth of venture capital funding. These companies raised the amount in the last two years. The data is remarkable, given that the fintech space has seen a drop in funding for most of this year.

African startups get $2.7B in VC funding

The amount of funding raised by these African startups was reported by Disrupt Africa. In a report dubbed “Finnovating in Africa, the company highlighted that the number of fintech startups across Africa had increased by 17.7% over the last two years.

The number of startups has now increased to 678. However, another significant trend has been the funding. Funding to these fintech startups has increased significantly in the same period. A report published in 2021 said that 277 startups had obtained $875 million worth of VC funding.

Over the last two years, the number of funded venture capital funds has doubled. On the other hand, the amount raised by these firms has reached $2.7 billion. The total funding secured by fintechs since 2015 has reached $3.6 billion, nearly a three-times increase compared to any other sector across Africa.

Despite the increase over the last two years, 2023 might not see increased funding for the fintech space. Fintechs might see a decline in fintech funding, with the market also feeling the pinch of the global capital shortage.

The countries in Africa leading in the amount of fintech funding secured are Egypt, Kenya, Nigeria, and South Africa. These countries account for 19.2% of the total fintech funding. Nigeria has taken a massive lead, securing over $1 billion in fintech funding since 2015.

The fintech firms leading the charts in the amount of funding secured are those operating in payments, remittances, lending, and financing. These firms account for 81.2% of the fintech funding secured between 2021 and 2023.

This share is a notable increase from the 77% share reported between 2019 and 2021. There has also been a change in the share of this funding as lending now accounts for 38% of the total funding, a notable increase from the previous 15%.

The co-founder of Disrupt Africa, Gabriella Mulligan, commented on the development, saying that the data showed that the African fintech industry was prime. The industry was now working towards financial inclusion while supporting the commercial revolution across the continent. Investors were now streaming into this space.

Fintech funding drops in the first half of 2023

The fintech industry has faced challenges during the first half of 2023, according to a KPMG report. These challenges include high inflation, high-interest rates, geopolitical tensions, and reduced valuations. The collapse of several US banks also affected fintech funding.

The total fintech funding dropped from $63.2 billion during the second half of 2022 to $52.4 billion during the first half of 2023. However, not all regions witnessed this drop, as in the Americas, fintech funding increased to $36 billion from $28.9 billion.