By Jonathan Ntege Lubwama
- Private capital investors pumped $7.4B into African companies in a vote of confidence for the continent
- Tech companies enjoyed the lion’s share of the investment at 81%, which shows the growing importance of this sector to the continent
A record $7.4 billion of private capital investments flew into Africa in 2021, more than double the $3.4 billion received in 2020 and $2.6 billion higher than the previous record in 2017. High net worth individuals like Amazon (AMZN +0.35%) founder Jeff Bezos, Tinder founder Justin Mateen and Twitter (TWTR -0.76%) founder Jack Dorsey all made investments in African companies, while Asian heavyweights like SoftBank and Tencent Holdings decided to up their stakes in African startups as well.
Why This Matters: The number of deals increased from 319 to 650, which can be interpreted as more investors understanding that Africa startups can deliver desirable returns on the investment. With up to 75% of the investors being international investors, with options to invest in various regions, this is a vote of confidence for the future of the continent.
Africa has been known as the last frontier of tech and investments. Specifically, tech companies enjoyed the lion’s share of the investment at 81%, which shows the growing importance of this sector to the continent. Its potential is well documented with internet usage expected to surge by 11% over the next decade and could represent a $180 billion economy.
Even with all of this, investors have not been willing to fully open their wallets until 2021. For example, fintech company OPay raised a super-sized $400 million Series C round. OPay’s raise was bigger than the entire venture capital amount of money African startups received in 2017. Also, it was equal to the volume received in 2014 and 2015. Last year the continent saw 16 super-sized deals worth $2.6 billion.
What’s Next: This momentum is expected to continue throughout 2022, as more international investors diversify their portfolios to include Africa-based companies. Also, with more startups raising money during the early stage rounds, it means they will be in a position to raise funds at bigger valuations in the later stages.
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