African Fintech Startups Raised $1.45 Billion in 2022 — Sector’s Share of the Continent’s Total Funding Drops

Even though their share of startup funding in Africa fell from 48.3% in 2021 to 43.4% in 2022, fintech still managed to raise 39.3% more capital in 2022 (1.45 billion dollars) than in 2021 ($1.04 billion). Nigeria was once again the country with the highest level of funding after 180 of its startups raised a total of $976,146,000, or 29.3% of the total on the African continent.

The share of the Big Four is falling

Fintech startups were able to secure $1.45 billion in funding last year, according to Disrupt’s 2022 African Tech Startup Funding Report. Overall capital gains in the sector increased by 39.3% compared to approximately $1.04 billion received in 2021. Despite this increase in overall fintech funding, the sector’s share of total capital raised by African tech startups has still declined from 48.3% in 2021. to 43.4% in 2022.

As in 2021, Nigeria was once again the top funding country after 180 of its startups raised a total of $976,146,000, or 29.3% of the African continent’s total. Both the number of funded startups in the West African nation and their share of the continent’s total eclipse those of Egypt, Kenya and South Africa.

In addition, while 2022 was a record funding year for countries such as Ghana and Tunisia, the so-called big four of the continent, namely Egypt, Kenya, Nigeria and South Africa, again accounted for a disproportionate share, according to the report. funding Fintech startups on the continent. However, the research data seems to point to a more even distribution of startup funding in the future.

“While in 2021, 80.1% of funded businesses were from Egypt, Kenya, Nigeria or South Africa, in 2022 this figure has dropped to 75.8%. Meanwhile, the share of total funding raised by these markets is also declining. In 2022, Big Four startups raised 80.8% of annual volume compared to 92.1% in 2021,” Disrupt said in a report.

Debt financing is the least preferred form of financing

In terms of the most popular funding methods, the report states that of the 310 funding rounds disclosed, more than 70% were “seed and pre-stage.” On the other hand, the number of startups reporting Series B funding or higher is less than 5% of the total.

Meanwhile, the survey results show that debt financing is the least preferred funding method, with only 33 out of 633 startups identifying a “debt element in any of their rounds.” While that number is slightly higher than 26 in 2021, according to the report, such a meager figure could mean companies are still “much more likely to raise equity” than debt.

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