Fintech dominant for African start-up financing, but the overall share fell in 2022

Fintech remains African tech’s most powerful force when it comes to funding, but growth is everywhere, and the sector’s share of total investment actually fell in 2022.

This is according to the eighth edition of the annual African Tech Startups Funding Report published by startup news and research portal Disrupt Africawhich is available for free to all as part of an open source initiative in partnership with Flat6Labs, MarketForce, 4Di Capital, Mercy Corps Ventures, Newtown Partnersand Insider PR.

The report tells the story of an impressive 2022 in which more startups raised more funding than ever before, despite a global decline in investment. In total, 633 startups raised $3,333,071,000 in 2022. This represented incredible growth. The number of funded startups increased by 12.2 percent at 564 in 2021, while the total secured funding jumped by 55.1 percent at USD 2,148,517,500 in 2021.

Fintech ascendant from a financing perspective

The fintech sector continues to drive Africa’s startup funding revolution, posting another record year, but its share of total funding fell as other spaces saw serious progress.

In total, 205 fintech startups (32.4 percent of the total, representing an increase of 11.4 percent compared to 2021 figures), raised an extraordinary US$1,446,794,000 – 43.4 percent of the continental total. This latter figure was up 39.3 percent at USD 1,038,456,500, which accounted for 48.3 percent of the total in 2021.

These impressive numbers were once again primarily driven by Nigeria, which accounted for nearly 40 percent of startups and $666,392,000 (46.1%) of funding. Flutterwave (US$250 million), Moove (US$181.8 million) and Yellow Card (US$40 million) were the main fundraisers. Egypt also had a strong year, with key rounds raised by MNT-Halan ($150m), Paymob ($50m) and Khazna ($38m).

Growth elsewhere

However, the relentless growth of Africa’s fintech space should not detract from positive developments elsewhere. Although total fintech funding increased, the overall share of investment fell. Non-fintech startups still raised the bulk of the capital, with many sectors enjoying bumper years. They included closest competitors e-commerce and retail-tech, and e-health, which is well-established in second and third place and growing faster than fintech.

Seventy-four e-commerce and retail-tech startups raised a combined USD 556,761,000 – which contributes 16.7 percent of the continent’s total pot, and represents a growth of 70.7 percent on USD 326,156,000 raised in 2021.

E-commerce and retail technology has seen a boom in funding since 2019, and in 2022 this trend continued for the fourth consecutive year with 70.7 percent growth in funding as above. 2021 had been up 271.5 percent from the previous year; while it was up again 85.6 percent from 2019. The USD 47,303,000 collected in 2019 was an increase of 283 percent from the previous year. Over these years, retail technology has emerged as an area attracting significant investor interest, helping to drive growth in the sector.

E-health placed third in terms of start-up funded companies, and fourth for secured total funding; with 53 startups (8.4%) raising $189,103,000 (5.7%).

In fact, 11 sectors had faster growth in terms of total funding in 2022, but admittedly the likes of restaurant tech and auto tech are developing from a very low base. Nonetheless, with funding snowballing faster than fintech in areas such as entertainment, marketing, transportation, recruitment and agri-tech, as well as e-commerce and health, we can expect to see fintech’s lead cut further in the coming years.

For more information, or to download the report, please visit disrupt-africa.com/funding-reportor send an email to Gabriella [email protected]or Empty on [email protected]

About Disrupt Africa

Disrupt Africa is a one-stop-shop for all news, information and commentary relating to the continent’s technology start-up – and investment – ​​ecosystem. With journalists roaming the continent to find, meet and interview the most innovative and disruptive tech startups, Disrupt Africa is a true showcase for Africa’s most promising businesses and business ideas. The research arm publishes in-depth reports on various aspects of the African tech startup ecosystem. Details here.

About Flat6Labs

Flat6Labs is the MENA region’s leading seed and early-stage venture capital firm, currently running the most recognized startup programs in the region. Flat6Labs invests in innovative and technology-driven startups, enabling thousands of passionate entrepreneurs to achieve their daring ambitions and eventually become their institutional co-founders. Launched and headquartered in Cairo since 2011, Flat6Labs has multiple offices across the region; with ongoing plans to expand into other emerging markets.

About MarketForce

MarketForce is a pan-African technology company building the super app for Africa’s 100 million merchants. Launched in 2019, MarketForce is a fast-growing YC-backed company running an asset-light business model. Having raised the largest Series A round in East and Central Africa in 2022, MarketForce is now operational in five markets in Sub-Saharan Africa (Kenya, Uganda, Tanzania, Rwanda and Nigeria), and has over 200,000 merchants and nearly 200 consumer brands trade on its platform.

About 4Di Capital

4Di Capital is an independent venture capital fund manager based in South Africa’s “Silicon Cape”, specializing in high-growth technology venture opportunities, early stage, early stage and growth financing.

About Mercy Corps Ventures

Mercy Corps Ventures invests in and catalyzes venture-led solutions to increase the resilience of underserved individuals and communities. Founded in 2015 as the impact investment arm of global development agency Mercy Corps, we have backed 41 early stage ventures to scale and raise over $333.9 million in follow-on capital. Our portfolio is 51 percent female-founded and centers around resilience-building solutions in adaptive agriculture and food systems, frontier fintech and climate-smart systems, so that those living in frontier markets can withstand disruptions and plan for the future. Through capital and support, piloting new approaches, actionable insights and rigorous impact management, we catalyze the ecosystem towards smarter, more impactful investments.

About Newtown Partners

Newtown Partners (newtownpartners.com) is the family office of successful startup founders, Llew Claasen and Vinny Lingham. It invests across a range of alternative and traditional asset classes, particularly early stage venture capital to support start-ups using new technologies and disruptive business models. Since 2019, it has been working with pan-African and European logistics player, Imperial (a DP World company) to activate their venture capital programme. Newtown Partners operates from offices in San Diego, USA and Cape Town, South Africa.

About InsiderPR

Insider PR is a leading emerging market PR firm helping visionary founders and investors across Africa and the Middle East tell their stories to the world. Using our “no-fluff” Write-Speak-Meet model, Insider has helped shape the narrative and raise the public profile of over 125 of the world’s leading emerging market companies, including Flutterwave (YC ’16) and Swvl (NASDAQ-listed ), as well as venture capital firms, funds and public agencies. Our US and Africa-based team provides 24/7 strategic communications consulting with a focus on thought leadership.