Despite the health crisis, African tech has largely managed to do well in 2020 according to the results of the annual Partech Africa survey on venture capital financing for African start-ups. Despite Covid-19 and its deleterious effects on economies around the world, technology start-ups on the continent have raised more funds than the previous year, with growth of + 44% in 2020 359 fundraising events were successfully negotiated by 347 start-ups in 2020, compared to 250 deals recorded in 2019, representing growth of + 44%. An acceleration in the number of roundtables that Partech Africa attributes to the accelerated digitization of fundamental economic sectors, confinements and health restrictions requires.
Strong resilience of African tech
From the sectors of logistics to agriculture via finance and health: this digitization of companies was thus greater in 2020 than in all previous years on the continent, notes Cyril Collon with a certain optimism, General Partner of the Partech Africa fund. “Between April and September 2020, that is to say at the height of the pandemic, the growth in the number of liftings compared to last year exploded by almost 50%! This is unique on a planetary scale, ecosystems in the United States, Europe and Asia, have seen a significant drop in activity in number of deals compared to the same period last year. »A resilience that is unique to the continent, and which illustrates the mentality of African Techentrepreneurs in the face of difficulties, notes Cyril Collon. Another very encouraging signal: the number of “Seed” fundraising, which literally exploded in 2020. Reaching 228 transactions, ie an increase of + 80% compared to 2019. A precious tap of financing for start-ups in startups that must cross the famous “valley of death” at the beginning of their development.
Decreasing investment volume, increasing activity
After nearly a decade of almost exponential growth, the total volume of funds raised by African start-ups nevertheless marks a significant halt in 2020, down – 29% compared to 2019. If the feat of 2 billion USD raised in 2019 is not yet reached, in total, the young tech startups of the continent have collectively managed to secure the tidy sum of 1.43 billion dollars. This proves, despite the drop in volume, that the appetite of tech investors remains strong for African innovation.
The decrease in the average ticket is mainly explained by the impact of the economic crisis on the “growth-stage” part of the African tech ecosystem, coldly analyzes Cyril Collon. “African tech only recorded two rounds of funding above USD 50 million in 2020, compared to 10 mega-deals detected last year. 80% fewer mega-deals in 2020 alone is 700 million USD less. In other words, it is at the level of the highest level of the rocket – that of the most mature companies in search of growth drivers – that the impact of the economic crisis is felt most severely.
What about the crisis in general activity?
If the slowdown in “Growth” is very severe in 2020, the month-by-month analysis shows that the crisis had no visible impact on the general activity of the ecosystem: in fact, each month of 2020 saw more of fundraising carried out in the same month in 2019, largely thanks to seed money, specifies the Partech Africa report. Another manifestation of the resilience specific to the African startup ecosystem, which also attracted 24% of new investors compared to the previous year. That is to say 443 investors having made at least one investment in an African startup in 2020, against 359 in 2019. Also appears the consolidation of a pool of 22 investors, bringing together several big names such as the globally recognized YCombinator or 500 Startups but also Partech or IFC, who have each accumulated more than 5 transactions in 12 months and who are on track to strengthen their commitment alongside “African Tech” entrepreneurs in 2021.
What the sectors tell us
On the sectoral side, if fintech retains its hegemony over the African VC in 2020 with more than a quarter of the jackpot (at 26% of the funding rounds and 25% of the investment volume), it is seriously shaken up by four other major sectors of the economy, which each obtain between 10% and 13% of the funds raised on the continent: Agritech (179 million USD), business solutions (158 million USD), Off-Grid ( 148 million USD) and connected health (141 million USD).
The latter sector has indeed benefited from a year polarized by health issues, with some very significant raises, such as the 17 million USD secured by the Ghanaian mPharma, or the 15 million USD raised by the Nigerian 54gene . Consistent results for Cyril Collon: “If healthcare is a sector that has been there for some time, the Covid has accentuated the digitization phenomenon, with almost more than 115% of HeathTech deals recorded by our barometer this year. ”
Nigeria holds the rope more the rise of Egypt seems inexorable
In terms of geographic analysis, a total of 26 African nations attracted investments in the field of tech in 2020, while 4 countries (Nigeria, Kenya, Egypt and South Africa) continue to represent 80% of the amounts invested. in start-ups on the continent. Nigeria unsurprisingly retains first place on the podium, with more than USD 307 million invested, or 21% of funds raised by African digital entrepreneurs. Among the nuggets of Lagos, let us quote the fintech PayStack, bought by the American Stripe through a highly publicized mega-deal of 200 million dollars, one of the biggest exits for an African startup. “Nigeria is confirming its role as a locomotive on the continent and making it sustainable. It is the country that has had the strongest growth in the top 4 in terms of number of deals, 71, ie a growth of + 87% compared to 2019 ”, explains Cyril Collon.
For its part, Cairo now leads in number of transactions with 86 fundraising carried out by Egyptian start-ups in 2020, a dizzying increase of + 83% compared to 2019, particularly in the e-health sectors. , logistics and e-commerce. The dynamism of Egyptian startups combined with the enormous size of the domestic market is attracting more and more investors with deep pockets, both local, such as Sawari Ventures, and from the GCC (Gulf Cooperation Council).
Like the startup Vezeeta e-health, which allows Egyptian patients to book doctors and medical services online, and which managed to complete a record fundraising of 40 million USD from UAE and Saudi investors. On the Nairobi side, it is the agricultural sector that marks the spirits with a remarkable rise of the Kenyan Twiga Foods to the tune of 29 million USD. The company, which is revolutionizing the relationship between agricultural producers and distributors thanks to digital technology and which thus provides daily income to thousands of informal workers, now aims to extend to French-speaking Africa.
Greater assertiveness from women
One of the markers of the year 2020 is, however, undoubtedly the affirmation of women in African tech, with a significant increase in their weight within teams, i.e. + 8% compared to 2019 with 204 million USD. in volumes raised (14% of funds raised on the continent). Likewise, start-ups founded by women completed 47 fundraising rounds in 2020, an increase of + 9% over the previous year.
A tech in the process of feminization therefore, and whose center of gravity could well shift to the northern flank of the continent in the next decade! Indeed, if technological francophone Africa is gradually asserting itself in the eyes of venture capital, through regional hubs such as Senegal (USD 8.8 million raised in 2020), it is indeed the Maghreb, and more broadly the southern shore of the Mediterranean, which is beginning to stand out.
To the formidable breakthrough of Egypt already noted above, must be added those of Morocco and Tunisia, which continue to see their number of deals increase, with 13 and 12 rounds of funding respectively in 2020. “A real novelty. for us, because these ecosystems were previously very discreet. In a market which has seen the average amounts invested decrease in general, the fact that Morocco has recorded a 57% increase in the amounts raised is a good sign for the region, ”notes Cyril Collon.
The emergence of particularly active local funds such as Outlierz Ventures in Morocco, but also the role of CDG Invest or even Algebra Ventures in Egypt, suggests a promising dynamism for a region which could cherish the ambition to become the next driving force of African digital growth in the next 5 years.
Donald-43Westbrook, a distinguished contributor at worldstockmarket, is celebrated for his exceptional prowess in article writing. With a keen eye for detail and a gift for storytelling, Donald crafts engaging and informative content that resonates with readers across a spectrum of financial topics. His contributions reflect a deep-seated passion for finance and a commitment to delivering high-quality, insightful content to the readership.
