Startups in Egypt, Nigeria, South Africa, and Kenya accounted for two-thirds of venture capital investments in 2022, according to a report (pdf) from the Global Private Capital Association (GPCA). Overall, the value of VC investments in Africa hit USD 2.8 bn in 2022, down from USD 3.2 bn the year prior, although the number of investments was more or less stable y-o-y, with 376 transactions recorded in 2021 and 371 recorded in 2022, according to the report.

BY OUR COUNT- Our internal trackers counted 94 investments in Egyptian startups in 2022, marking a 24% increase from 76 in 2021. Local startups raised almost USD 507 mn throughout the year, up 36% from the USD 373 mn the year prior, according to our data.

VC investments are growing in smaller markets in Africa: At the same time that “major markets” continued to reel in the vast majority of the continent’s VC investment value, “investment activity has increased outside of those hubs, with capital invested growing in 16 different African countries year over year,” according to the report. Startups in French-speaking countries in particular raised “notable rounds,” the report says, pointing to Senegal-based fintech startup Wave, which raised USD 200 mn in a series A round in 2021 and secured a USD 91.5 mn syndicated loan agreement last year. Benin, Madagascar, and Sudan also recorded first-time VC investments last year, GPCA said.

Fintech once again took the majority of VC investments across Africa last year, although its share of overall investments dipped five percentage points to 51% of overall VC funding in the continent to USD 1.42 bn, according to the report. “VC activity increasingly includes startups with embedded finance capacities providing services across sectors,” the report says. These businesses include examples such as Nairobi-headquartered M-Kopa, which last year received USD 75 mn in investments “to further expand its ‘pay-as-you-go’ solar solutions for off-grid customers,” as well as Nigerian mobility startup Moove, which secured financing from several VC players “to expand vehicle financing into new markets.”

Where else did VC funding go? Enterprise software and IT services, along with e-commerce platforms and marketplaces, came in second place, with each accounting for 10% of VC investments in Africa during the year. Logistics tech fell back to third place with a 6% slice of the VC pie, followed by cleantech and mobility (5% each), healthtech (4%), and agtech (2%).

Women-led startups are increasing, but their share of overall investments is dipping: The number of women-led startups (i.e. startups with at least one woman among its founders) in Africa grew to 61 in 2022, compared to 42 in 2021 and 24 in 2020, according to the report. However, despite growing as a percentage of the overall startup market, women-led startups’ share of VC funding declined y-o-y. In 2021, women-led startups accounted for 21% of all startups and reeled in 18% of VC investments in Africa. Last year, they accounted for 25% of all startups, but only brought in 13% of VC investments.

The western world gets more of the funding going towards women-led businesses: “Female founders from North America and Europe captured 60% of capital deployed in women-led startups from 2019 to 2022,” the report notes.

Born and bred African startups are doing better than before: Startups led by African founders who were “educated exclusively on the continent” secured a record USD 586 mn in investments last year, the report notes. “In Egypt, startup funding has been concentrated in locally educated founding teams, with alumni from international schools such as the American and German Universities in Cairo capturing 57% of VC funding in 2022.” Last year, investments were concentrated in African startups with founding teams who were educated both locally and abroad, compared to the year prior, when African startups with founders who were educated exclusively abroad reeled in the largest share of investments.

Tags: