The 2022 Partech Africa Report presents a resilient African tech ecosystem that has continued to grow, raising $6.5 billion in 2022.
A leading African tech-focused venture capital firm, Partech Africa, recently released its 2022 Annual Report on Africa Tech Venture Capital. The report provides a comprehensive overview of the current state of the African tech ecosystem, including the key trends and developments.
In this article, we will highlight the key findings from the Partech Africa report, which provide valuable insights into the current state of the African tech landscape.
Investors have poured an impressive US$6.5 Billion into tech startups on the continent, a remarkable 8% increase from 2021 – across 764 deals! This report, comprised of disclosed and confidential deals, saw debt funding more than double in volume to a staggering US$1.55 billion through 71 deals – an impressive 65% year-over-year growth!
Despite the global VC market suffering a 35% decrease in funding in 2022, the African Tech sector was surprisingly able to remain unaffected and record net growth! This remarkable achievement was tested during the year’s first quarter, as activity slightly dipped by 14%.
However, African start-ups still managed to break records for funding raised during the first half of the year. Unfortunately, Q3 saw a decrease in deals and funding raised compared to past years. Nevertheless, this market has proven its resilience and strength throughout this difficult period.
African Tech Equity Funding in 2022
Focusing on equity funding, the report revealed the ecosystem was still accelerating during Q1 and Q2 of 2022 compared to 2021, with the YoY comparison showing Q1 and Q2 at +127% YoY and +83% YoY, respectively. However, the global VC slowdown stifled growth in activity in Q3 [-65% YoY] and Q4 [-35% YoY].
In 2022, fundraising activities remained flat across all stages. At $1.4M, Seed+ ticket sizes averaged higher in 2022 [+12% YoY], while Series A remained the same at $8.5M. Later stages reverted to 2019 levels, as Series B and Growth round sizes dropped by -23% and -50% YoY, respectively.
In addition, 2022 witnessed a significant reduction in the number of megadeals [over 100M], with only seven deals compared to 14 in 2021.
At the launch of the annual report, Tidjane Deme, General Partner at Partech, commented that “2022 was a tough year globally for venture capitalists and growth investors as investments were slashed by one-third. However, the African tech environment exhibited great fortitude as more financiers increased their involvement in the region by funding local teams and funds tailored to the area – a demonstration of what is likely to be the most effective way forward.”
Nigeria – Most Attractive Investment Destination.
Despite a 36% decrease in capital invested in Nigeria compared to 2021, it remains the most attractive destination for investments in Africa, with $1.2B in capital being brought in. South Africa, Egypt and Kenya each attracted more than $0.7B, with Ghana not far behind at just over $0.2B. In total, 28 countries across the continent attracted equity funding in 2022, 13 of which were located in Francophone Africa – making this a great investment time.
The report revealed that Fintech, which has traditionally been the subject of substantial investment, experienced the greatest impact from the market downturn in terms of the reduction in large funding rounds. Nevertheless, Fintech remained the most funded sector in Africa among all sources of capital with a total equity volume of $1.9B (39%) and a total debt volume of $691M (45%).
Additionally, other sectors such as Cleantech have also seen considerable growth and acquired a notable portion of equity funding activity this year — Cleantech accounted for 18% of total equity funding ($863M) with an increase of 347% year-on-year, and 39% of total debt funding ($605M).
Key Highlights From The Report:
- Female-founded startups raised 22% of all equity rounds in 2022, up 2% points from 20% in 2021. They also contributed US$644 Million or 13% of the total equity funding, down 3% points from 16% in 2021.
- Outside of the top 4 countries, Ghana ($202 million), Algeria ($150 million), Tunisia ($117 million) and Senegal ($105 million) were the only other countries that broke the $100M funding mark.
- Despite a slowdown in the growth rate of equity investors, Africa’s tech ecosystem attracted 1,149 unique investors for the first time [+29% YoY vs 2021]. African tech has seen more investors committed, with 89 participating in 5 or more deals (compared to 65 investors in 2021).
- The number of debt investors active on the continent is growing 2.5x YoY, with a good mix of local debt institutions, international lenders with emerging market vehicles and Development Finance Institutions.