Venture capital (VC) firms injected a record $5.2 billion into African startup firms in 2021, a nearly fivefold increase from 2020 levels, which dipped during the COVID-19 pandemic, according to a report by the African Private Equity and Venture Capital Association (AVCA).
As Reuters reported Tuesday (April 19), the success of Nigeria’s Paystack, which was acquired in 2020 by U.S. payments firm Stripe, and fellow FinTech Flutterwave, which was valued at more than $3 billion, has made Africa a more attractive target for VCs.
“African startups raised more in 2021 alone than the preceding seven years combined,” according to AVCA, which promotes private investment across Africa. The financial sector comprised 60% of last year’s VC investments by value and almost one-third of the deals by volume last year.
Nigeria had the highest level of VC investment in Africa last year, surpassing South Africa. Most of Africa’s VC deals were in early-stage funding rounds, but late-stage funding also jumped significantly in 2021, including a nearly fortyfold increase in money raised during Series C fundraising efforts.
Almost one-third of the transactions by volume were on deals of less than $1 million, while 62% of the total value of VC financing in Africa in 2021 came through investments in companies worth more than $50 million, the report said.
Earlier this week, Zambia-based card-issuing startup firm Union54 raised $12 million in a seed extension round, pushing forward with its goal of offering an alternative to major card companies. The latest funding round follows Union54’s earlier seed round of $3 million, with both rounds led by Tiger Global.
Related: Zambian Card Issuer Union54 Raises $12M
Union54 offers card issuing services in partnership with licensed card issuers in their respective countries. The company’s application programming interface (API) lets software companies from Africa issue and manage their debit cards without needing a bank or a third-party processor.
Union54 said it wants to offer a homegrown alternative to global card issuers like Mastercard and Visa, who dominate Africa while imposing higher fees for merchants.
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NEW PYMNTS DATA: THE FUTURE OF BUSINESS PAYABLES INNOVATION STUDY– APRIL 2022
About: While over half of SMBs believe that an all-in-one payment platform can save them time and improve visibility into cash flows, 56% believe that the solution could be difficult to integrate with existing AP and AR systems. The Future Of Business Payables Innovation Report, a PYMNTS and Plastiq collaboration, surveyed 500 SMBs with revenues between $500,000 and $100 million to explore how all-in-one solutions can exceed SMBs’ expectations and help future-proof their businesses.
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