One hundred African start-ups have already raised their first million

By Maureen Songne
Posted on Wednesday, 21 September 2022 11:18

With $400 million raised, the start-up OPay took the lead in 2021. A record that is still unmatched. ©OPay.

Over the past three years, the profile of start-ups on the continent that have reached this stage has been evolving, with investors sometimes showing interest from the moment the company is created.

African start-ups continue to break records. In the course of September, 100 of the continent’s start-ups reached the milestone of raising their first million dollars in funding, according to data compiled by the specialist newsletter Africa: The Big Deal.

This symbolic figure was reached even before the end of the summer, while for the whole of 2021, the number of start-ups that raised more than $1 million stood at 112. If the trend continues, the number of African start-ups reaching this target could rise to 150 by the end of the year.

Based on publicly disclosed deals, the evolution is meteoric, since, at the same point in 2020, 55 African start-ups had already reached this milestone, and by 31 August 2019 there were 40.

Increasingly anticipated fundraising

This year, 84% of start-ups raised between $1 and $5 million, with a median of just over $2 million. This result is close to pre-pandemic levels: in 2019, the average fundraising ticket reached $2.1 million, before dropping to $1.5 million in 2020, and then to $1.7 million in 2021.

Another significant change in the profile of these start-ups is that 70% of them are now less than three years old, compared to 56% in 2019. Fundraising rounds have also shifted from an equal split between “Seed” (priming phase) and “Serie A” (acceleration phase), to a proportion of “Pre-seed” (creation phase) and “Seed” phase exceeding 80%.

An over-represented ‘Big 4’, despite South Africa’s slowdown

Unsurprisingly, South Africa, Nigeria, Kenya and Egypt are the host countries most likely to give birth to start-ups – 84% of them hail from these four nations. However, after being the top provider in previous years, Pretoria has fallen behind the other “Big 4” countries, with only nine start-ups on the list. In contrast, Cairo and Abuja top the list with 27 and 28 start-ups respectively, while Nairobi has 17.

Despite this flurry of fundraising, the previous record for a single venture capital deal has yet to be surpassed. Nigerian fintech Opay broke the record in 2021, raising $400 million. As a result, due to this one-off mega-deal, July and August 2022 saw a year-on-year decline of 20% and 67% respectively. However, if we compare the same period from January to August 2022 with the previous year, the figures remain very positive, with a 25% increase in transactions at $100,000. The same can be said for the amounts raised, which rose from $2.3 billion to $3.6 billion.

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