African Startups Have Gotten $1.19 Billion VC Funding in Just 6 Months of 2021

VCs are making it rain on African startups this year as funding deals have now reached a whopping $1.19 billion with deals.

An exciting point to note is that deals worth $1 million and above accounted for about 95 percent ($1.14 bn) of total funding deals in the same period.

The numbers show a massive level-up to more than double the amount raised during the same period last year, according to The Big Deal, an African data newsletter.

Some of the notable funding rounds were closed by Kuda, Flutterwave, Termii, Havenhill, Kwik, Afriex, Bankly, and Appzone. Fintech startup, Flutterwave led the way with a gargantuan $170 million Series C raise to become the third payments unicorn in Africa.

Fintech is Still the Blue-Eyed Boy

Of all the sectors, financial technology services remain favorites for venture capitalists investing in Africa. According to the report, nearly half (48%) of funding during the period went to fintech start-ups.

This is an improvement from the 38% that was contributed in H1 2020 during the pandemic and the 14% contributed during the record-breaking 2019 season.

In terms of regions, startups based in the top four startup ecosystems are still preferred. 80% of that funding raised by startups during the period are headquartered in one of the big 4.

However, Nigeria and South Africa lead the pack, each accounting for 28% of the startups that raised funds.

US-based VCs Funded More Startups than African VCs

While the high influx of funding affirms the increasing viability of African startups, foreign VCs are still outpacing indigenous ones. Of the 369 investors that have been involved in at least one $100k+ deal in Africa this year, 110 (30%) are headquartered on the continent.

The United States has 133. This means that the US has more investors involved in a deal in Africa than African ones. For context, no local VC contributed to Flutterwave’s much-lauded $170 million Series C.

However, the report pointed out that Africa-based investors are significantly more active than US-based investors.

Based on this, it's puzzling why African investors have fewer deals and an apparent gulf in funding when compared to foreign investors, especially as regards later-stage investments.

At the current track, 2021 is well on its way to breaking the 2019 record of funding in Africa. With the obvious upsurge in funding, one can say that African startups are doing a lot of things right, and are winning the trust of venture capitalists.