With $1.16 billion raised for African technology start-ups, 2018 is a testament to the exponential interest shown by investors in the African continent, according to the third report of the Partech investment fund.
+ 108% of investments with $1.16 billion raised in 2018, 146 start-ups concerned compared to 124 in 2017, 70 series A or B raises. African technology start-ups have had the wind in their sails, so much so that the Partech investment fund speaks of a “monumental” year 2018 for fundraising.
To examine this “record” year presented in the third annual report of the Partech investment fund, the two rapporteurs, Cyril Collon and Tidjane Dème, followed the same methodology as the two previous years: they recorded equity financing only, for amounts ranging from 200,000 to 100 million dollars, by start-up technology companies with their primary market on the continent.
“It’s just amazing. In 2015, when we started working on a fund dedicated to Africa, we had predicted that the billion dollars would be reached in 2020. We are already two years ahead of schedule,” says Cyril Collon in the report. In 2016, exercises increased by 33% over the previous year, then in 2017, by 53% over 2016, and now by 108% in 2018, representing a fourfold increase in investments over the last 36 months.
Proof that small African start-ups are growing and inspiring more and more confidence: among the 164 rounds of financing recorded in 2018, 70 (compared to 48 in 2017) are Phase A and B deals, for a total amount of $482 million (+58%), and 14 are growth deals (compared to 7 in 2017), for a total amount of $602 million (+102%). In this sense, the report notes that private equity groups (Helios, Goldman Sachs, Carlyle), as well as large private companies (Naspers, Paypal, Pernod-Ricard), are now investing earlier in start-ups that are still in a growth phase.
Like last year, Kenya, Nigeria, and South Africa accounted for the vast majority of the funds invested (78%). In 2018, their start-ups attracted $994 million of the $1.13 billion raised in the continent’s 19 countries where rounds of more than $200,000 were held. Behind them, Tanzania and Egypt, followed by Senegal, the first French-speaking country and seventh in the ranking.
The most significant fundraising of the year was carried out by the German start-up Frontier Car, which specializes in the sale of used cars and is based in Nigeria, with $130 million raised in two rounds of financing. Next come Webuycar in South Africa ($98 million) and Tala in Kenya ($50 million).
As in the previous year, it is the fintechs (Tala, Cellulant, Mines, Jumo…) that attract the majority of funds with 50% of investments. On the other hand, the B2B/digital adaptation sector, third in 2017, is gaining ground, draining 30.4% of funds (Twiga Foods, Frontier Car, Kobo 360, etc.), while digital services to consumers and telecommunications are falling, from 42% of funds raised in 2017 to 19.6% of funds raised. In absolute terms, however, they remain relatively stable, rising from $235 million to $228 million (-3%).