While African tech startups may have escaped the crippling effects of the raging coronavirus pandemic in the first quarter of 2020 (January-March), there is consensus among founders and investors that the pandemic will have a cooling effect on the ease with which startups raise funds in the months to come. In the meantime, venture funding in the first quarter of 2020 for African startups reached $350 million according to data from Briter Bridges, a tech ecosystem data consultancy.
The break down
- South Africa, Nigeria, Kenya and Egypt topped the funding charts. These 4 countries also received the largest share of funding in the whole of 2019.
- Notable receipts in the period between January and March this year include the $55 million debt and equity financing raised by Jumo, a financial services company based in Cape Town.
- Flutterwave’s $35 million made up more than half of what startups raised in Nigeria. Sendy raised $ 20 million, a demonstration of the rising tide of e-commerce in Kenya.
- In Egypt, doctor-booking platform Vezeeta raised $ 40 million as interest in healthcare funding on the continent heighten.
- reports show that 86 deals were announced in Q1 2020, comprising funding from accelerators, incubators, grants, and prize monies. They estimate that total funding from these disclosed deals totalled $245.13 Million.
- While Briter’s Q1 2020 data shows fairly normal activity occurred in January and February, there was an 80 per cent drop in March, the month in which Africa began to record the first cases of coronavirus infections.
- According to Weetracker, in Q1 2019, African startups raised USD 186.09 Mn in total. In the preceding quarter (Q4 2018), the net funding amount was USD 175.86 Mn.
With the global economy expected to go into recession in 2020, the 74 per cent growth in funding seen between 2018 and 2019, is unlikely to recur. Major economies that fund African startups will most certainly record significant declines.