U.S. investors are visiting Africa again, helping startups achieve a record year

African technology startups raised a record $ 5 billion this year as U.S. investors piled into companies helping the continent’s technologically smart and young population conduct financial transactions.

Nearly two-thirds of the 20 largest published deals involved investors from U.S. companies, including Endeavor Catalyst and Ribbit Capital, in at least three deals each, while Bezos Expeditions made its first investment on the continent, according to Briter Bridges Intelligence, which tracks investments in African startups.

There were more than 500 jobs at an early stage – most worth less than $ 5 million each, according to Britter. This sets the stage for a surge of additional capital in Africa. Investors are betting that companies such as Chipper Cash, TeamApt and Flutterwave will benefit from increased demand for banking services on a continent that lacks financial infrastructure.

“Interest in exploiting business potential in Africa is not showing a slowdown,” said Dario Giuliani, director of Briter Bridges Intelligence. It was “a year of awakening, in which domestic success stories and an increase in the number of international investors moving mandates to Africa made a promising leap.”

About 40 startups have raised more than $ 50 million, and some could achieve unicorn status – a company worth more than $ 1 billion – in the next 12 to 24 months, Giuliani said. Jobs in 2021 were record highs, amounting to close to 5 billion dollars in announced investments, after the slowdown caused by the 2020 pandemic.

The year also led to the launch of several funds focused on Africa, including the Nigerian Ventures Platform which raised $ 40 million.

Most of the funds are concentrated in three traditional startup hubs on the continent – Nigeria, South Africa and Kenya. Egypt is in fourth place, attracting about 438 million dollars of investments in 2021, which is a sixfold increase compared to 2018.

Fintechs attracted the most funds – 62% of investments in 2021. Health and logistics companies are the other sectors that have attracted investments, according to Britter.

© 2022 Bloomberg

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