Four charts that show African tech’s solid 2022

The struggling global economy has affected global startup funding badly, with a noticeable year-on-year decline of 55% in Q3 2022 compared to Q3 2021.

However, African startups managed to sustain their upwards trend as they accumulated more than $4.85bn by the end of December, a 4.75% increase from the same period last year.

Max Cuvellier, the co-founder of startup database Africa The Big Deal, said that 2022 funding will eventually exceed $5bn given that December 31st roundups are always underestimated.

Although the growth is not as astonishing as in previous years – from 2020 to 2021, investment grew by 120% – 2022 is still another record-breaking year for the continent in terms of the amount raised, number of deals and number of investors. 

The “Big Four” – Nigeria, Kenya, Egypt, and South Africa – remain preferred destinations for investors, with all exceeding $500m in funds raised in 2022.

Ghanaian, Algerian, Tunisian, and Senegalese startups have seen a sudden rise in funding, attracting $390m, $151m, $119m, and $112m respectively. 

West African startups lead the regional picture, accounting for $1.8bn in funding, although Nigerian startups represent almost 70% of it. 

Eastern and Northern Africa follow closely, with $1.2bn and $1.1bn respectively, while Southern and Central Africa lag, accounting for only 12.5% ($600m) and 1% ($50m) of the continent’s total funding in 2022.  

Fintech is the leading sector in Africa, accounting for 37% of total funding and more than 40% of funds received by three of the Big Four.

Kenya received far more investment in the energy sector than in fintech, with a major contributor being the solar system provider startup Sun King, which concluded Africa’s largest 2022 deal at $260m last April in a Series-D funding led by General Atlantic’s BeyondNetZero and M&G Investments. 

Another popular sector is logistics and transport, which has been boosted by the multiplication of ride-hailing and food delivery startups such as Yassir – an Algerian on-demand service app founded by Silicon Valley-trained Noureddine Tayebi – which raised $150m in a Series B funding last November. 

For a consecutive year, Launch Africa, a Mauritius-based venture capital fund, was the most active investor on the continent, with 60 deals worth at least $100,000, representing more than one deal a week on average.    

The American tech giant Google supplied equity-free funding of $4m to 60 African early-stage startups through its Black Founders Fund for the second year running, with Nigerian startups making up a third of the California tech giant’s 2022 cohort.

The Government of Canada is a newcomer in this year’s top 10 investor ranking, having secured 20 deals throughout the year.

Last January, FinDev Canada – Canada’s development finance institution – pumped $13m into the Energy Entrepreneurs Growth Fund (EEGF) which invests in early and growth-stage energy startups in sub-Saharan Africa.

Funding going to female-founded and female-led startups this year remained low. Only 2.4% of funding (24 deals) were raised by a female-only team and 85% (486 deals) by a male-only team.

In total, 4% of African startups’ CEOs are women. However, an acknowledgement that women should play a bigger role in Africa’s startup ecosystem is growing.

Last February, South African fund FIVE35 Ventures said it was seeking to raise $30m over the next three years to invest in women-led startups.