African tech booms in 2021 with $5.2 billion raised in equity

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 year of historic growth

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.

Megadeals drove record levels of funding

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.

Increasing round sizes

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.

The rise of a new asset class: debt funding

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.

Key facts:

• Country breakdown: Nigeria is the undisputed leader in the Africa tech VC ecosystem, pulling ahead on both funding amount and number of equity rounds. While Nigeria is in a league of its own with $1.8B, 34% of all African equity funding, Egypt, South Africa and Kenya also attracted more than half a billion each. Senegal completes the top 5 as francophone Africa accelerates 2.6x faster than the continent, at 695% YoY growth in amount invested.
• Sector breakdown: Driven by Megadeals, Fintech accounted for only 32% of deals, but a large majority (63%) of funding. Digitization of foundational sectors of the economy (Commerce, Education, Energy, Health, Logistics) meant each of these sectors broke into the $200M range.
• Founder gender breakdown: Female-founded start-ups raised 20% of all rounds in 2021, up 7 percentage points from 13% in 2020. They took $834M or 16% of the total equity funding, up 2 percentage points from 14% in 2020.
• Investor breakdown: Africa’s tech ecosystem attracted 2x more investors in 2021 (+101% YoY) with 891 active investors. They showed more commitment to the market, with 268 involved in 2 or more deals (+144% YoY) and 65 involved in 5 or more (+195% YoY).