Startups in Nigeria and other African countries raised $4.85bn in 2022 according to data from Africa: The Big Deal.
The database and insights firm which focuses on startup funding above $100,000 in Africa explained that this could still cross the $5bn after delayed funding announcements from investors are made. It stated that 1,000+ deals of $100k or more had been announced in 2022, an 11 per cent year-on-year increase from 2021.
It said 75 per cent of the total fund raised were in the big four countries, Nigeria ($1.2bn), Kenya ($1.1bn), Egypt ($820m), and South Africa ($550m). Fintechs dominated the funding conversation with 37 per cent of deals in the year.
The firm said, “There is a lot to say about 2022 of course, and you can count on us to dissect the data in the coming weeks, but if you have to remember 3 key numbers about 2022, these are the ones:
“While our data currently adds up to $4.85bn, we’re almost certain 2022 funding will eventually exceed $5bn. Indeed, December 31st round-ups are always underestimated. On December 31st, 2021, for instance, we had gathered deals worth $4.33bn for the year; our latest tally is some $300m higher, at $4.63m.
“This is due to a delay in investors sharing deals confidentially with us, and to deals becoming known later (for instance, a start-up sometimes only releases data on their seed round when they announce their Series A round a year or two later). For this reason, we’re confident the $151m missing to reach the $5bn mark will eventually be accounted for. And you can count on us to give you a shout when they do.”
It noted that African startups had a strong performance in 2022, especially in a bear market. According to the data insight firm, startups on the continent has a great first half of the year, which slowed in the second half.
It said, “The fact that start-ups on the continent raised more in 2022 than in 2021 is unique in itself, as all other continents are set to record a YoY decline (watch out for a post on this when the 2022 CB Insights data is out later this month).”
It added, “And Africa has attracted more interest than ever before: 1,000+ unique investors have participated in at least one deal on the continent in 2022, a +15 per cent YoY progression compared to 2021.”
While startups in Nigeria and Africa are generally attractive to investors and did relatively well in 2022, a global economic decline and rising inflation shook the global tech ecosystem. This is as the global ecosystem lost about $7.4tn.
In an earlier interview with The PUNCH, the founder of Lendsqr and a trustee of Open Banking Nigeria, Adedeji Olowe, explained that high inflation rates have led the US to increase its interest rate, which has made its treasury bills more attractive than investing in startups.
He said, “These are factors that are influencing the movement of money away. This cycle, that is, funding scarcity isn’t going to last forever. It is likely to get worse towards the end of the year, although by next year it will start shaping up again. Between now and when things start getting better, startups without solid bases are at risk.”
