By Claire Obae
- 8 African fintech companies managed to raise $100M in 2021
- A huge chunk of the investment came from foreign investors who showed a keen interest in the fintech sector
A new class of African startups just got a major stamp of approval with eight start-ups hitting the $100 million mark in fundraising. These companies were responsible for raising $4 billion which was about 40% of the total. Africa has been neglected for a long time, but it seems the pandemic sparked something to get the ball rolling and to increase the check writing.
Why This Matters: When it comes to venture capital, Africa is no longer the new kid on the block. Visits from Alibaba (BABA -5.95%) CEO Jack Ma and Block (SQ -7.43%), formerly known as Square, CEO Jack Dorsey, along with a first IPO by e-commerce giant Jumia (JMIA -8.65%), signaled a new era for tech startups on the continent. Opay and Fltutterwave led with a collective $600 million in funding last year and were responsible for starting the fire. It is worth noting that female-led startups carried the day in raising millions in 2021.
Imagine a startup raising $100 million in one shot. A few years back, this would have been considered impossible. So, how did we get here and what kind of companies are raising these sums?
There’s no doubt that Africa is becoming an increasingly important market for technology companies. The continent is home to more than 1.2 billion people and has a growing middle class with increasing purchasing power.
Unique funding opportunities in Africa have played a key role in startup access to capital, including many initial cash infusions from individual or corporate investors. It all comes down to the fact Africa itself is changing, and rapidly giving rise to new opportunities for its indigenous businesses and entrepreneurs.
What’s Next: The African tech ecosystem has been growing at a rapid pace and more than ever, many businesses are becoming household names. At the moment, the continent has a fintech landscape dominated by financial services and mobile money. However, from the 2021 results, we are now seeing an emergence of new verticals in areas including payment, lending, e-commerce, and others. It is possible that the focus is shifting on developing an ecosystem that promotes collaboration among the different stakeholders instead of competition.
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