African Fintech Startups Raised $1.45 Billion in 2022 – Sector’s Share of Continent’s Total Funding Drop – Fintech Bitcoin News
Despite seeing their share of Africa’s startup funding drop from 48.3% seen in 2021 to 43.4% in 2022, fintechs still managed to raise 39.3% more capital in 2022 ($1.45 billion) than the did in 2021 ($1.04 billion). Nigeria was again the best funded country after 180 of its startups raised US$976,146,000 or 29.3% of the African continent’s total.
The Big Four’s share is falling
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 raising represented a 39.3% increase from the approximately $1.04 billion secured in 2021. Despite this increase in fintech’s overall funding, the sector’s share of total capital raised by African tech startups still fell from 48 .3% in 2021 to 43.4% in 2022.
As was the case in 2021, Nigeria is again the best-funded country after 180 of its startups raised US$976,146,000 or 29.3% of the African continent’s total. Both the West African nation’s number of funded startups and their share of the continent’s total dwarf those of Egypt, Kenya and South Africa.
Also, according to the report, while the year 2022 was a record year of funding for countries such as Ghana and Tunisia, the continent’s so-called Big Four – namely Egypt, Kenya, Nigeria and South Africa – again accounted for a disproportionate share of the continent’s funding for fintech startups . However, the study data apparently points towards more evenly distributed startup funding in the future.
“In 2021, 80.1% of the funded ventures came from either Egypt, Kenya, Nigeria or South Africa, in 2022 this fell to 75.8%. At the same time, the share of total funding that these markets bring in is also falling. In 2022, the “big four” startups 80.8% of the annual total, down from a bumper 92.1% in 2021, the Disrupt report said.
Debt financing the least preferred form of financing
As for the most popular funding methods, the report said that of the 310 funding rounds disclosed, more than 70% of these were “at the seed and pre-seed stage.” On the other hand, the number of startups that disclosed Series B funding or higher was just under 5% of the total.
Meanwhile, the study findings suggest that debt financing is the least favored funding method with only 33 out of a total of 633 startups disclosing a “debt element as part of any of their rounds.” Although this total is marginally higher than the 26 seen in 2021, such a low figure, according to the report, could mean that it is still “much more likely to raise equity capital” than debt capital.
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