Startups in Africa have continued to record significant progress in fundraising deals, after a report revealed that these startups in May 2023, raised the sum of $645 million through at least 50 $100k+ deals.
The amount raised showed a significant increase from the sum recorded in April (4.4x MoM) which saw only $129.8 million raised, also more than the sum recorded in the same month last year, (+50% YoY). From several $100k+ deals points of view, there was a very decent progression compared to April.
The largest three contributors to the funds raised in May 2023, were startups from two sectors, Fintech (one) and energy (two).
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Fintech platform that provides digital financial services to underbanked consumers by leveraging data to combine digital micropayments with the Internet of Things (IoT) technology, M-KOPA took the lead with more than $250 million secured in funding ($200m debt + $55 million equity).
M-KOPA disclosed plans to acquire at least 100,000 customers every month to grow its existing three million customer base in Kenya, Nigeria, and Ghana.
One of the largest solar companies in Africa and Asia, Sun King occupied the second position after it secured $130 million in a funding round and a joint $20 million working capital facility, bringing the total sum to $150 million.
In third position is TymeBank, an exclusively digital retail bank based in South Africa, that provides accessible and affordable banking services, including mobile banking, savings, and loans. The startup raised $77.8 million in a pre-Series C round.
Launched in February 2019, TymeBank employs a hybrid digital banking and physical service operations model and has continually pushed forward the evolution of banking across countries in Africa.
While the total sum raised by startups in May this year is encouraging, the report suggests that they could bring false hope like in February which was a better month than May in terms of both funding raised and the number of deals. February recorded $700 million raised with over 56 deals recorded.
One would have suggested that March would have been better in terms of funds raised and deals sealed. Unfortunately, the numbers significantly plummeted which saw it drop a 10-fold month-on-month with only $ 70 million raised compared to $700 million in the previous month.
Analysts are therefore suggesting that the remarkable funds raised in May should not give false hope and decline massively in the next month (June), just like the scenario that played out between February and March. They are however optimistic that the numbers would continue to increase.
Notably, Africa’s VC scene has so far remained resilient despite major geopolitical and financial headwinds that are precipitating failing startup valuations and sell-offs across the world. In 2022, African startups experienced a successful year for venture capital, raising a total of $6.5 billion. The ecosystem remarkably raked in $1 billion in the first seven weeks of the year.
The African continent has continued to birth remarkable startups catering to the needs of customers and addressing their pain points. Their remarkable innovation and product offerings have seen Africa now home to seven unicorns, making waves across the continent and beyond. These unicorns include Flutterwave, Jumia, Interswitch, Andela, Wave, Opay, and Chipper Cash.
Despite experts suggesting that Africa will witness a decline in funding for startups due to the ongoing economic downturn, African startups have remained resilient, with many continuing to innovate and create new business models to drive growth in the sector
Africa has been touted as the next frontier for tech investment, as projections suggest that African startups will continue to rake in more funds in each passing year.