Seth Onyango, bird story agency

Venture capital funding in Africa bucked global trends in 2022, growing 8% to US$6.5 billion as investors sought to diversify outside the continent's "big four" startup markets.

And while Fintech was again the standout performer, the surprise came in the form of an increase in the Clean Technology sector, better known as Cleantech. 

Cleantech is defined as "any process, product, or service that reduces negative environmental impacts through significant energy efficiency improvements".

Cleantech received 18% of Africa's total equity funding at $863 million, an increase of 347% from the previous year, as well as 39% of the total debt funding at US$605 million.

Investment firm Partech reported that Africa's VC market remained unfazed by the global slowdown, with debt funding exceeding US$1.55 billion during the forecast period.

The report showed that the equity funding ecosystem was still accelerating during Q1 and Q2 of 2022 compared to 2021. The year-on-year comparison showed Q1 and Q2 at +127% and +83%, respectively, demonstrating a solid uptick in activity.

Tidjane Deme, General Partner at Partech, noted that 2022 was a particularly challenging year for the venture ecosystem worldwide, as venture and growth investors scaled back their investment by a third. 

"However, by comparison, our report revealed that the African tech ecosystem showed great resilience, as more investors have doubled their commitment to the continent by investing in local teams and funds dedicated to the market, proving to be the best way forward," she said.

Nigeria retained its top rank in African venture capital, bringing in US$1.2 billion, despite a 36% decline from 2021. South Africa, Egypt, and Kenya each attracted more than US$700 million in funding, with Ghana completing the top five with just over $202 billion. 

Algeria (US$150 million), Tunisia (US$117 million) and Senegal (US$105 million) were also standout performers.

Partech's report also shows that 28 countries attracted equity funding in 2022, 13 in Francophone Africa.

Fintech was again the most funded sector across all sources of capital, capturing 39% of the total equity volume (US$1.9 billion) and 45% of the total debt volume (US$691 million). 

Overall, the report's findings highlight Africa's continued resilience in the face of global uncertainty and the potential for even more success in the future.

The heightened VC presence is likely a sign that investors and savvy entrepreneurs see value in the African business landscape and have taken a greater interest to capitalise on newfound opportunities there.

Female-founded startups raised 22% of all equity rounds in 2022, a marginal 2 per cent up from 20% in 2021, and a total of $644 million or 13% of all equity funding, down three percentage points from 16% in 2021.

The increasing number of investors and the rise in female-founded startups is seen as a promising sign for Africa's technology ecosystem, with the strong growth in equity and debt funding a testament to the dynamism of the African tech market.

bird story agency