Nigeria’s start-ups raise $1.2bn as Africa rakes $4.8bn funding in 2022

By Alexander Chiejina

• Nigeria leads Kenya, Egypt, SA to rake in 75% of venture capital funds into Africa

A total of $4.8 billion was raised by start-ups in Africa in 2022 with Nigeria leading three other African countries (Kenya, Egypt and South Africa) to rake in 75 percent of investor funds into the African continent, Africa The Big Deal Report reveals.

A breakdown of where the funding went shows that West Africa attracted 37 percent of investor funds into Africa (at $1.8 billion). This is closely followed by East Africa that attracted 26 percent ($1.2 billion); North Africa raked in 23 percent ( or $1.1 billion); Southern Africa raked in 12 percent ( or $600 million) and Central Africa, which attracted one percent of the fund (or $50 million).

Sharing insights on this development, Max Cuvellier, head, Mobile for Development (M4D) at GSMA, disclosed that, “as we continue to unpack the story of start-up funding in Africa in 2022, we would observe that Western Africa, which despite a small decrease YoY (-12%, from $2 billion in 2021 to $1.8 billion in 2022) remains firmly in the lead.”

The strong performance in other regions, Cuvellier noted, means that this region in Africa represented a relatively smaller portion of the funding on the continent in 2022: 37 percent, down from 43 percent in 2021 (-7pp).

He went further to explain that Northern Africa, one of the clear winners of 2022 with a +62 percent YoY growth in terms of funding raised (from ~$700 million to $1.1 billion), crossed the $1 billion mark for the first time. Its share of funding raised on the continent grew, from 15% to 23% (+8pp).

The other region reaching the $1 billion milestone for the first time was Eastern Africa, which attracted more than twice as much funding in 2022 compared to the previous year ($1.2 billion vs. ~$600 million) resulting in its relative share of continental funding more than doubling YoY: from 12% to 26% (+13pp).

Southern Africa, however, is the region suffering the biggest loss (-44% YoY) from $1.1 billion in 2021 to just over $600 million in 2022. As a result its share of the total funding was also about halved: 12 percent, down from 23 percent (-11pp).

Central Africa remains miles behind its neighbours (fun fact: it’s the only region touching all four others) with ~$50 million raised (more than double the 2021 number) and a total share of funding that surpassed one percent for the first time.

A caveat of course is that in each of the regions – save for Central Africa –  a ‘Big Four’ dominates. Their weight ranges from Nigeria’s 68 percent of Western African funding to South Africa’s 92 percent in Southern Africa.

Nigeria, considered a giant in Africa’s startup ecosystem raked in $1.2 billion – weighs as much as a full region. Although, the relative weight of the Big Four in their respective regions has been decreasing between 2021 and 2022 in Western Africa (-17pp YoY), Northern Africa (-14pp YoY) and Southern Africa (-6pp YoY); Eastern Africa is the only exception with Kenya’s share of East Africa funding growing +14pp YoY.

It’s worthy to know that over 1,000+ deals of $100k or more were announced in 2022. This is a very strong performance, +11% YoY, especially in a bear market. With Africa attracting more interest than ever before: 1,000+ unique investors have participated in at least one deal on the continent in 2022, a +15 percent YoY progression compared to 2021.

The fact that start-ups on the African continent raised more in 2022 than in 2021 is unique in itself, as all other continents are set to record a YoY decline.

Maxime Bayen, Venture Building lead at Catalyst Fund and co-founder, Africa The Big Deal, explains that while the data currently adds up to $4,849 million,  he is certain that 2022 funding will eventually exceed $5 billion.

“Indeed, December 31st round-ups are always underestimated. On December 31st, 2021 for instance, we had gathered deals worth $4,326 million for the year; our latest tally is some $300 million higher, at $4,626 million. This is due to a delay in investors sharing deals confidentially with us, and to deals becoming known later (for instance, a start-up sometimes only releases data on their seed round when they announce their Series A round a year or two later). For this reason, we’re confident the $151 million missing to reach the $5 billion mark will eventually be accounted for,” Bayen explained.

A synopsis of Africa The Big Deal Report reveals that the Fintech sector remains the beautiful bride for venture capital funds with the sector raking in 37 percent of deals. The largest deal announced in Africa is the $260 million Series D funding for SunKing in 2022. A global unicorn, Flutterwave, raised $250 million in its Series D round in 2022.