Partech Africa has released its annual report on Venture Capital Funding for African Startups. Despite worldwide VC growth, Africa tech developed faster than any other region in 2021, with twice the activity and more than three times the amount invested, reaching $5.2 billion.
A total of $5.2 billion was raised in 681 rounds of equity financing. When debt is included in, the sum rises to $6 billion in 724 rounds. The new record for 2021 reflects a hyperactive ecosystem, with nearly three agreements closed per everyday.
The number of transactions nearly doubled, making Africa tech one of the world’s fastest-growing ecosystems. It surged dramatically in 2021, far above the previous six years of growth with a CAGR of 45 percent.
14 Megadeals (above $100 million in equity only) were completed in 2021 by 12 firms. These Megadeals received 48% of total equity capital, totaling $2,47B. Only eight Megadeals have been reported in the history of the African finance ecosystem before to 2021. In 2021, $100M+ fundraising rounds became the norm, with nearly twice as many Megadeals completed in a single year as in the entire history of the ecosystem.
The average round size climbed throughout all phases, resuming its upward trend after a brief dip in 2020. While Seed, Series A, and B round sizes increased significantly, Growth deals experienced an unprecedented increase in average round size of +426 percent year on year, owing to the spike in Megadeals at this level.
As a consequence, average round sizes across all stages have returned to pre-covid levels, with excellent recovery and ongoing growth across all African VC market categories.
In 43 debt rounds, 37 African digital start-ups raised a total of $767 million. As start-ups mature and become more predictable, debt funding becomes a beneficial tool for accelerating expansion while reducing dilution from equity rounds. The year 2021 marked genuine developments in this arena, with strategic debt players introducing specialised debt funds aimed at emerging economies, particularly Africa. Nigerian start-ups raised over half of the entire debt ($345M), accounting for 45 percent of the total debt raised.