Capital investment in African tech start-ups dips by 71.7%

Capital investment into African tech start-ups last year declined by 71.7per cent, reflecting the disruption of COVID-19 on venture capital flows.

According to the African Venture Capital 2020 report by WeeTracker, during the year, African tech start-ups managed to raise $757.2-million in venture capital after inking 478 financing deals despite the knock-on effects of the pandemic.

The report also noted that about 129 Nigerian companies secured capital raises during the year under review, followed by 90 Kenyan and 83 South African start-up companies in the tech sphere. It added that “financial services, healthcare and e-commerce were industries with maximum investment in terms of amount and number of deals” signed.

“The deals included are both disclosed and privately disclosed to us and include equity, debt, acceleration/incubation, prizes and grants. The number doesn’t include private equity investments into traditional/non-tech businesses and mergers and acquisitions across tech and non-tech industries,” WeeTracker said in its report.

Deals involving Jumo, Flutterwave and Chipper Cash are among the ventures that accounted for the highest investments within the Fintech category.

“Given the status of the spread of coronavirus across Africa and other major investing economies, the future seemed a bit grim for Venture Capital investments.

“The last two years, 2018 and 2019, were extremely positive for the start-ups headquartered or operating in the continent, and the momentum did not break even in a harsh year like 2020,” reported WeeTracker.

In 2019, African tech start-up ventures raised $1.3-billion in investments. This followed a massive rise in the number of equity and debt financing deals signed across the continent to 427 deals.

COVID-19 ravaged African markets in 2020, although to a lesser extent than was the case in Asia and Europe.