Nigeria secured the top spot for startup investment deals across Africa in 2021, with over 480 total deals, including disclosed and undisclosed transactions, according to the African Investment Report by Briter Bridges, outpacing South Africa, Kenya, and Egypt in deal volume.
Nigeria’s Dominance in Deal Volume
The Briter Bridges report highlights Nigeria as the leading destination for startup investments in Africa in 2021, followed by South Africa (second), Kenya (third), and Egypt (fourth). Egypt stood out for its high concentration of local investors compared to foreign ones, reflecting a robust domestic investment ecosystem. The report estimates total funding at $4.9 billion, comprising $4.65 billion in disclosed deals and $300 million in undisclosed transactions, based on investor-provided data.
Fintech Leads Sectoral Funding
Fintech startups dominated Africa’s investment landscape, capturing 62% of total funding, driven by innovations in payments, banking, and asset financing. Health and biotech followed at 8%, with logistics at 7%, reflecting growing interest in these sectors. Key products attracting investment included payment platforms, solar home kits, point-of-sale systems, and B2B commerce solutions, with professional skill development and medical delivery also trending.
Notable Mega-Deals
The report notes a significant increase in high-value deals, with 12 transactions exceeding $100 million, totaling $1.9 billion. Examples include Andela ($200 million Series E), Flutterwave ($170 million Series C), Chipper Cash ($250 million Series C across two rounds), OPay ($400 million Series C), Trade Depot ($110 million Series B), and Jumo ($400 million). These mega-deals, primarily in fintech, accounted for a substantial portion of the $3 billion from the top 20 deals, underscoring their role in driving investment volumes.
Surge in Early-Stage Investments
The year 2021 saw a doubling of total investment volume since 2000, with a 25% increase in announced deals. Notably, deals between $500,000 and $5 million surged, indicating strong seed and Series A activity.
The report attributes this to renewed optimism post-COVID-19 and heightened early-stage investments in 2020. Of the 480 deals, those valued at less than $1 billion totaled $1.6 billion, reflecting a broad base of smaller transactions supporting emerging startups.
Key Trends and Insights
The report highlights several trends shaping Africa’s startup ecosystem in 2021:
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Post-COVID Optimism: As global economies adapted to COVID-19, investor interest in Africa intensified, with international funds increasingly including the continent in their mandates.
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Local and Foreign Investment: While foreign investors from the US and UK led funding, local African investors, particularly from South Africa and Mauritius, played a growing role, with firms like Ventures Platform and LoftyInc Capital Management stepping up.
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Sector Diversification: Although fintech dominated, health, biotech, and logistics gained traction, with embedded finance models integrating into agriculture, mobility, and digital commerce.
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Challenges in Data Accuracy: Briter Bridges’ estimates, which include undisclosed deals, differ from other trackers like Partech ($4.9 billion in equity deals) and The Big Deal ($4.6 billion), reflecting methodological variations in defining African startups and deal types.
Nigeria’s Fintech Leadership
Nigeria’s fintech sector was a key driver, with startups like Flutterwave, OPay, and Chipper Cash securing significant funding.
The National Information Technology Development Agency (NITDA) noted that fintechs contributed over 35% of direct investments to Africa in 2021, supported by Nigeria’s developmental regulations and enabling policies.
For instance, Flutterwave, a Lagos-based unicorn, raised $170 million, handling over $6 billion in transactions across 140 million payments.
Challenges and Opportunities
Despite the funding boom, challenges persist. The report suggests that Africa’s startup ecosystem, while catalytic, captures a small share of the overall economy, limiting its broader impact.
Regulatory hurdles in Nigeria often push startups to incorporate abroad (e.g., in Mauritius or the US), potentially skewing investment data.
Additionally, women-led startups received only 0.95% of funding, a decline from 4% in 2019, highlighting persistent gender disparities.
Looking Ahead
The 2021 investment surge, approaching $5 billion, signals Africa’s growing attractiveness to global investors, with Nigeria at the forefront.
The rise in mega-deals and early-stage funding reflects a maturing ecosystem, but addressing regulatory barriers and fostering inclusivity will be critical for sustained growth.
As Kenneth Obiajulu of Agricorp noted, the combination of challenges and opportunities continues to drive innovation, positioning Nigeria and Africa for a potential boom in the next decade.
