African blockchain funding soars by 429%

African blockchain startups raised $474m in 2022, up 429% in a year, according to the African Blockchain Report 2022, published by blockchain venture capital company CV VC in association with Standard Bank.

The overall number of deals on the continent grew by 12%, with deals in the areas of infrastructure, personal identification, record-keeping, and access to financial independence. African venture funding grew by 34% to $3.14bn, with blockchain accounting for a 15% share of all venture funds in Africa.

“Combining the sharp increase in blockchain funding with the fact that Africa had the smallest global increase in the number of blockchain deals, yet the only region globally exhibiting increases in all deal sizes, indicates that African blockchain startups are raising larger cheques and investors are gaining confidence. This is against the backdrop that Africa’s share of all global funding has risen more than any other region by a considerable margin,” write the report’s authors.

Recent months have seen the emergence of Africa’s first blockchain “unicorns” –  privately held startup companies with a current valuation of $1bn or more – according to the report. Seychelles-based crypto exchange Kucoin reached the value in the third quarter of 2022, while Scroll.io, which describes itself as a scaling solution for the Ethereum blockchain, recorded the valuation in the first quarter of this year.

Geographic concentration

Still, despite the rapid growth recorded in Africa’s blockchain industry, Africa’s share of global blockchain funding remains modest, increasing from 0.3% in 2021 to 1.8% in 2022.

The deal value was also geographically concentrated, with Seychelles (43.9%) and South Africa (37.3%) accounting for 81% of African blockchain funding. Nigeria was the leading country in terms of the number of deals (13), but their value amounted to $24.7m, compared to $208m for Seychelles (six deals) and $176.6m for South Africa (six deals). Liberia was ranked in value with two deals, principally as a result of a $37.5m fundraising round by Jambo, a software development house, while Kenyan firms raised $25.8m across four deals. 

More education needed

In his introduction to the report, Gideon Greaves, managing director of CV VC Africa, calls for more corporate education on the benefits of blockchain technology. “Despite the rapid growth and progress made, a significant knowledge gap still needs to be addressed. Having had the opportunity to engage with legacy companies across the continent, it is clear to me that most C-level staff don’t know what blockchain does or why they should pay attention to it. This lack of knowledge and understanding hinders the potential for further growth and progress. It is imperative that we bridge this gap and educate those in positions of power and influence on the potential of blockchain technology.”