Before 2020, investments in African startups were ongoing. However, since the inception of the current decade, the African startup ecosystem, particularly fintech, has piqued the interest of both regional and foreign investors. Analysts have attributed the over $200 million acquisition of Nigerian-based PayStack by U.S-based Stripe as the trigger of the current spate of interest in the continent’s startup economy.
Between January and October 2021, investments in more than 8, 300 African startups have exceeded the $1 billion mark for the first time, as top global investment companies secure their share in the market.
Nigeria and Kenya became the most popular destinations for African Venture Capitalist investment by 2020, accounting for $307 million and $305 million, respectively. By the first half of 2021, investments in the African startup space have surpassed $1.19 billion, with analysts forecasting a surge to $2.28 billion by December.
These record-high figures have led many to believe that the bulk of investments on the continent have come from foreign Venture Capitalists (VCs) and Private Equities (PEs). Interestingly, home-based players have made significant contributions to its startup economy. A report by Business Insider indicates that the majority of the investment recorded in Africa this year was facilitated by some home-based VCs and PEs.
Some of the VCs and PEs topping the list of investors in Africa include Mauritius’-based AfricInvest, Senegal’s Partech Partners, Nairobi-based Novastar Ventures, Nigeria’s Alitheia IDF and South Africa’s Naspers Foundry. Their combined investments on the continent from inception to date is worth over $3 billion. Startups in their portfolio include Boomplay, Palmpay, InstaDeep, Aerobotics, Kudi, RelianceHMO, Terrapay, MoneyFellows, mPharma, iProcure, Paga, Baobab, the student hub, Naked, FoodSupply, Ctrl, TradeDepot, etcetera.
This week, Nigeria and U.S-based eCommerce startup, TradDepot, announced the closing of a $110 million Series B equity and debt funding round led by the International Financial Corporation (IFC) with the participation of home-based investors Novastar Ventures, Sahel Capital and Partech Partners.
Although foreign investors have demonstrated a growing interest and have contributed substantially to African startups in 2021, home-based players seem to have invested more. As of now, neither California’s Silicon Valley Bank (SVB), which led Chipper Cash’s $100 million Series C round in May, nor China’s SoftBank Vision Fund, which led OPay’s $400 million funds in August, are among the top ten VCs and PEs dominating investment in Africa’s startup ecosystem this year.