Fintechs receive 62% of the $4.9 billion raised by African tech companies in 2021

Fintech accounted for nearly two-thirds of the $4.9 billion raised by African tech companies in the past year. Fintech groups also dominate with over $50 million in funding, accounting for 40% of the total number of tech companies.

Covid-19 factor

Nearly two-thirds of the $4.9 billion in funding raised by African tech companies in 2021 goes to fintechs, data from a new report shows. Fintechs accounted for 40% of deals that raised more than $40 million.

Report: Fintechs to capture 62% of $4.9 billion raised by African tech companies in 2021
Source: Africa Investment Report 2021.

as the picture shows Newest 2021 Fintech dominance finally reaches ‘highest number of single non-M&A period’, Africa Investment Report [mergers and acquisitions] Recorded transactions to date exceed $100 million. The report also revealed that Nigeria has the largest share of fintech companies that have raised more than $100 million.

Meanwhile, the report suggests that the Covid-19 pandemic is likely to be the main reason behind the surge in funding for both fintech and non-fintech firms.

“Logistics and energy are closely followed by funding volumes, but the recent wave of digitalisation – likely driven by Covid-19 – is boosting sectors such as e-commerce, agriculture and healthcare,” the study concluded.

High concentration of funds

However, the same report does admit that most of the money raised in 2021 is focused on a handful of projects. The report explains:

Although highly concentrated in a few cases, [which] Representing less than 3% of total disclosed deals but more than 55% of total disclosed funding, the size of this investment is significant and a pull factor for some investors.

In addition to equity financing, Investing in Africa data shows that debt financing is increasingly becoming a viable source of financing. To back up this claim, the report states that 6% of the total funding disclosed in 2021 will be debt financing.

Report: Fintechs to capture 62% of $4.9 billion raised by African tech companies in 2021
Source: Africa Investment Report 2021.

From the source of late-stage investors, the data shows that the United States is by far the largest source of funding for African technology companies, accounting for 62.5%. It is followed by the UK with 7.5%, followed by South Africa with 6% and Canada with 4%.

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Terence Chimwala

Terence Zimwara is an award-winning journalist, author and author from Zimbabwe. He has written extensively about the economic woes of some African countries and how digital currencies can provide an escape route for Africans.

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