Funding to African tech startups surpasses $700m in record-breaking 2020

2020 was a record year for investment into the African tech startup ecosystem, with more startups raising more money, from more investors than ever before.

Inclusion Times
Inclusion Times

According to the sixth edition of the annual African Tech Startups Funding Report 2020 released by startup news and research portal Disrupt Africa, new funding records were set over the course of 2020, as 397 startups raised an impressive US$701.5 million in total funding. Both these figures are up substantially on the previous year, with the number of funded startups increasing 27.7 per cent compared to 2019, and the funding total growing by 42.7 per cent.

Though growth has slowed a little, the numbers represent impressive growth on 2019 in spite of the COVID-19 pandemic, and mean the African tech startup ecosystem continues on its positive trajectory from a funding perspective.

This year’s edition of the report also counts at least 370 active investors, marking 42.8 per cent growth on the previous year, when the data tracked 261 investors. This figure was in itself a 68.4 per cent rise on the 155 investors we found in 2018.

Kenya, Nigeria, South Africa and Egypt remain emphatically Africa’s “big four” from a funding perspective, accounting for 77 per cent of funded startups and 89.2 per cent of total investment. Nigeria (85), Egypt (82) and South Africa (81) lead the way from a ventures perspective, but when it comes to total combined raised capital it is Kenya that is Africa’s leader, with startups from the East African country raising over US$190 million in funding in 2020.

Though these markets remain clear leaders, there are signs of growing activity elsewhere on the continent, with startups backed in 24 African countries, up from 19 in 2019, 20 in 2018, and 18 in 2017.

The financial technology sector was, yet again, the most attractive to investors in 2020, with more startups securing funding than any other sector and a combined total that dwarfed all others.

In all, 99 fintech startups raised investment over the course of the year, representing 24.9 per cent of the overall total, while the combined amount raised by fintech companies over the course of the year jumped 49.3 per cent to US$160,319,065.

However, growth in fintech investment is slowing to some extent, and other sectors also had impressive years – notably e-commerce and retail-tech, e-health, logistics, energy, recruitment and HR, transport, and agri-tech.

The report is available for free download here.

South Africa In Focus:

Population: 59.6 million (Compared to The USA's 328.259 million)

GDP: $369.85 billion (Compared to The USA's $21.433 trillion)

GDP Per Capita: $6,193 (Compared to The USA's $65,850)

Report