Fintechs make up nearly two thirds of the $4.9billion raised by African technology companies in the last year. The 40% of total tech firms that have raised more than $50 million in funding came from Fintech groups.
A new study has revealed that nearly two-thirds (or $4.9 billion) of funding raised in Africa by technology companies between 2021 and 2023 went to fintech firms. This is according to data from a report. Fintechs were responsible for 40% of capital deals that exceeded $40 million.
As shown in the latest Africa Investment Report, the fintech dominance in 2021 eventually culminated into a period with “the highest number of single, non-M&A [mergers and acquisitions] deals above $100 million” on record so far. This report shows Nigeria as the country with the highest number of fintech companies that have raised over $100 million.
The report also suggested that Covid-19 could be responsible for the increase in funding not just of fintechs but other non-fintech companies as well.
“Logistics and energy follow by volume of funding but the most recent wave of digitization — perhaps boosted by Covid-19 — is propelling sectors such as e-commerce, agriculture and healthcare,” concluded the study report.
Highly Concentrated Funding
However, this report acknowledges that 2021 saw the largest concentration of money raised for a small number of projects. This is what the report says:
Even though it is concentrated in some cases, [which]Although it represents less than 3 percent of all disclosed deals, 55% captures total disclosed funding. This investment size is significant and serves as a draw factor for many investors.
Africa Investment Report data confirms that debt financing is becoming an increasingly viable financing option. This assertion is supported by the Africa Investment Report data, which shows that debt financing accounted for 6% of the total funding disclosed in 2021.
The data shows that America is the largest source of capital for Africa-based tech companies, with a share of 62.5%. The United Kingdom came in second with a 7.5% share, South Africa was at 6% and Canada at 4% respectively.
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