African tech startups raised over $1.2bn in funding in 2018 – Partech report – Ventureburn

A report by French venture capital (VC) firm Partech Africa has found that 146 African tech startups raised $1.163-billion in equity funding last year over 164 rounds, marking what it said is a 108% year-on-year growth in funding raised by tech startups on the continent.

The report — which was published last Friday (22 March) by Partech Africa Fund general partners Cyril Collon and Tidjane Dц╗me — covers equity deals and funding rounds valued at between $200 000 and $100-million.

In a statement on its website, Partech said the report (opens as a PDF) tracks both disclosed and undisclosed equity deals involving African tech and digital startups.

Partech Africa’s report found that fintech was the top-funded vertical accounting for 33% — $379-million — of total funding raised by African tech startups in 2018

The report’s authors note that an African startup is defined as a company “with their primary market being in Africa itself” and is “not based on the headquarter’s location or the country of incorporation”.

The author’s however, make no reference to the company’s age, in defining what constitutes a tech startup or not.

In explaining how they gathered the data, Partech said it had accessed information on undisclosed deals “thanks to our relationship with the ecosystem and entrepreneurs”. The report does not take into account grants, awards, prizes, debt, loans, initial coin offerings, non-equity assistance and merger and acquisition deals.

[#PartechAfrica Report] The #VCfunding raised by African tech start-ups in 2018 totaled US$ 1.163 Billion, compared to US$ 560 Million in 2017, a +108% growth YoY. #Africa

— Partech (@PartechPartners) March 22, 2019

Partech’s report this month is only the latest in a long line of such reports on funding of tech startups in Africa.

In January, three African tech publications — Disrupt Africa, Digest Africa and Weetracker — released reports with varying findings on how much funding African startups raised last year. In December last year, Ventureburn also weighed in, with its own calculations for the biggest tech deals on the continent for 2018 (see the list here).

П÷⌠┬П÷▄█Funding raised by #African #startups in 2018 is a burning topic this week. Nothing like a good old excel to understand the figures. Methodologies differ (look at avg. deal sizes) but good news is that funding (in amount and # of deals) is growing massively YoY !

— Maxime Bayen (@MaxBayen) January 31, 2019

Disrupt Africa’s African Tech Startup Funding Report 2018 found that 210 startups had raised $334.5-million in investments, Weetracker’s African Venture Capital 2018 Report stated that $725.6-million, while Digest Africa’s Digest Africa Index found $1.19-billion was raised over 454 deals. A Ventureburn article in January put the varying figures down to differing research methodologies.

Б─°ItБ─≥s quite simply astonishing. When we started our journey to create the #PartechAfrica Fund in 2015, we had anticipated the $1 Billion mark to be broken by 2020. We are now already 2 years ahead of our projectionsБ─² says @cyrilcollon #Africa #startups

— Partech (@PartechPartners) March 25, 2019

Last October, AfricArena organisers — citing internal research and deal tracking — predicted that the funding raised by African startups in 2018 would crack the $1-billion mark.

Fintech top funded vertical

Partech’s report found that at least 33% of total funding raised by African tech startups last year was in the fintech sector, with a total of 42 deals accounting for $379-million.

The report places the various tech verticals into three groups, namely: financial inclusion, B2B and tech adoption and online and mobile consumer services.

In all, according to the study, the financial inclusion sector — encompassing fintech, insurtech and off-grid tech — attracted 50% of total investments at $582-million over 64 deals.

[#PartechAfrica Report] Driven by #fintech, financial inclusion remains the main investment sector in #Africa attracting 50% of the total funding but there's a shift putting #B2B & #Tech adoption in the 2nd position with 30.4% of funding vs 13% in 2017

— Partech (@PartechPartners) March 22, 2019

This, while the B2B and tech adoption sector — which comprises enterprise, connectivity and hardware, as well as marketing tech verticals — brought in 30.4% of total investment at $335-million across 55 deals.

Commenting in the same statement, Dц╗me said B2B models are naturally attractive for entrepreneurs. “At a time where monetisation is at the heart of the challenges, enterprise clients can pay and enable to present unit economics that can converge more quickly than B2C models. Of course, this is reassuring the investors,” he explained.

Online and mobile consumer services accounted for 19.6% of total funding raised, at $228-million across 45 deals. This includes $31.8-million raised across three deals in the edtech sector and $18-million raised over seven transactions in the healthtech sector.

Kenyan startups raised $348-million

The report states that Kenya leads the continent in attracting equity funding with 44 deals that racked in $348-million. Partech pointed out that a total of 11 Kenyan startups raised 13 rounds that are equal to, or higher than $5-million.

[#PartechAfrica Report] In 2018, Kenya, Nigeria and South Africa received 78% of the total funding with Egypt close behind, an exact repeat of 2017. In the rest of Africa, there were 19 countries with at least one equity tech deal above US$ 200K

— Partech (@PartechPartners) March 26, 2019

Nigeria came in second with $306-million over 26 deals, with South African startups raising $250-million over 37 deals. Egyptian startups raised $67-million over 19 deals, while Senegal emerged the leader in francophone Africa with $22-million raised across four deals.

In the report, Partech notes that funding raised across the rest of the continent is growing as fast as in Kenya, Nigeria and South Africa, and is now attracting “decent attention”. Partech attributed startups from the rest of the continent to having raised $260-million over 57 deals.

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Read more: Weetracker African VC report raises questions on definition of tech startups
Read more: Tech startup site Disrupt Africa mum on how it collects data for $150 reports [Updated]Read more: AfricArena predicts funding raised by African startups in 2018 will crack $1bn