Fintech funding in Africa jumped 49.3% in 2020 to US$160 million. The amount was raised by 99 fintech startups, making fintech the dominant tech sector of 2020, a new report by regional startup news and research portal Disrupt Africa found.
Number of funded startups, by sector, The African Tech Startups Funding Report 2020, Disrupt Africa, Jan 2021
The annual African Tech Startups Funding Report, released on January 21, 2021, looks at the major tech funding trends observed in Africa last year.
According to the study, fintech attracted the lion’s share of 2020’s African tech startup funding with more startups securing funding than any other sector and a combined total that dwarfed all others. Not only fintech surpassed other tech segments, fintech funding and deal counts for 2020 exceeded levels recorded the previous years.
Fintech deal sizes also grew in 2020, rising from an average of US$1.3 million in 2019 to US$1.6 million in 2020, suggesting that Africa’s fintech startups are growing and maturing with more Series A and Series B round being closed.
Fintech funding, by year, The African Tech Startups Funding Report 2020, Disrupt Africa, Jan 2021
Africa’s big four make up 97% of all 2020’s fintech funding
Africa’s so-called big four – Nigeria, South Africa, Kenya and Egypt – attracted 97% of all fintech funding in 2020.
Fintech funding in the big four, The African Tech Startups Funding Report 2020, Disrupt Africa, Jan 2021
Nigeria, Africa’s most populous country with the biggest startup ecosystem, accounted for more than half (55.7%) of all African fintech funding in 2020 with US$89 million raised by Nigerian fintech companies last year. The figure represents more than the double of what Nigerian fintech companies raised in 2019 (US$37 million), the research found.
Notable 2020 Nigerian fintech deals included payment startup Flutterwave’s US$35 million Series B, cryptocurrency exchange Bitfxt’s US$15 million Series A, lending platform Aella Credit’s US$10 million round, and mobile-first challenger bank Kuda’s US$10 million seed round.
These four fintech fundraisings were amongst 2020’s biggest rounds in Nigeria, showcasing investors’ appetite for startups in the sector.
Top six Nigerian funding rounds in 2020, The African Tech Startups Funding Report 2020, Disrupt Africa, Jan 2021
After Nigeria, South Africa ranked second, accounting for 23% of all fintech funding raised in 2020 at US$38 million. Notable fintech fundraisings in 2020 included car subscription company Planet42, which closed two rounds totaling US$12.4 million, alternative small and medium-sized enterprise (SME) financing startup ProfitShare Partners’ US$5.8 million funding (debt and quasi-equity), and cryptocurrency exchange Valr’s US$3.4 million Series A.
Like Nigeria, fintech was a leader in South African tech startup funding in 2020, with 26 fintech startups receiving backing last year, surpassing e-health (ten), e-commerce and retail-tech (seven), and ed-tech (seven).
Kenya attracted the third largest amount in fintech funding in 2020 at US$16 million. Neobank Umba and insurtech startup Turaco both raised US$2 million in seed funding. Human resources management and payroll solution provider WorkPay closed a US$2.1 million seed round.
With US$13 million raised by fintech companies, Egypt ranked fourth, accounting for 8.2% of all African fintech funding in 2020. Deals included personal financial management startup Moneyfellows’s US$4 million Series A, payment startup Paymob’s US$3.5 million round and financial wellness startup NowPay’s US$2.1 million round seed round.
Besides the big four, other African countries that saw fintech companies raise funding last year include Ghana (Zeepay, Pavelon), Uganda (Eversend, Xeno), Zambia (Lupiya, PremierCredit), Senegal (Sudpay), Morocco (Invyad, OnePay), Tunisia (Sqoin) and Ivory Coast (Lumkani), data from Disrupt Africa show.
A booming fintech sector
Africa is home to about 600 fintech companies, according to Disrupt Africa’s most recent numbers. These are addressing some of the region’s most pressing challenges, including the large population of unbanked and underbanked.
Though innovations like mobile money have massively contributed to improving financial inclusion in the region, many opportunities still remain in underdeveloped verticals including insurtech, wealthtech and electronic know-your-customer (eKYC)/digital onboarding.
This, coupled with increasing collaboration with banking incumbents and growing links with regulators, is leading to strong and sustainable investor interest and confidence in Africa’s fintech space, a trend that’s set to remain for quite some time still, the report concludes.
African tech startups raised a new record of US$701 million in 2020, up 42.7% from 2019. The number of active investors in Africa also grew significantly last year, rising from 261 in 2019 to 370 in 2020, showcasing investors’ increasing confidence and interest in backing tech startups on the continent.
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