The COVID-19 pandemic marred 2020. According to Techpoint Africa, with a lot of panic and economic downturn across different markets, it was a no brainer that we would witness a drop in funding activities in our ecosystem. Before the pandemic and corresponding lockdowns, Africa’s funding activities were robust in January and February 2020, better than the same period in 2019. However, in March up until June 2020, investments dropped significantly. 

Yet, the ecosystem reacted with new funds and initiatives to support startups through the crisis, as well as encourage entrepreneurs to develop solutions to mitigate the impact of COVID-19. Startups launched new COVID-related offerings and some sectors, such as ed-tech and e-health, boomed.

Today’s post highlights the many talking points of Africa’s startup year.

How much did African startups raise in 2020? 

$1.3 billion, according to Briter Bridges’ new report. This report considered 70 funds, institutions, and syndicates that provided insights into their theses, portfolios, and pipeline. WorldRemit’s $500m deal for Sendwave; Paystack’s $200m deal by Stripe; and Network International’s $288m deal for DPO Group, made up 87% of the total acquisition recorded.

Which country raised the most funding? 

According to a report by Startup list Africa, Kenya was 2020’s leading destination in Africa for startup investments. Kenya received over 25% of total funding in Africa. Kenya led the way with $266 million in investments ahead of Nigeria ($237 million), South Africa ($198 million), Egypt ($125 million) and Ghana ($90 million). 

Kenya has been attractive to investors for the past five years. In 2016, $101 million was raised; 2017, $357 million; 2018, $210 million; and 2019, $152 million. Over the past 5 years, $1.09 billion has been pumped in Kenya’s ecosystem, which is second to Nigeria’s $1.74 billion.

Big bucks: Paystack’s acquisition 

On 15th October, US payments giant, Stripe, announced that it was acquiring Nigeria’s Paystack. Interswitch, another Nigerian payments company, had attracted a reported $200m investment from Visa in 2019, pushing their valuation over $1bn. Paystack’s deal was reportedly worth over $200 million. That makes it the biggest startup acquisition to date to come out of Nigeria, as well as Stripe’s biggest acquisition to date anywhere.

Over time, Paystack will contribute to expanding Stripe’s Global Payments and Treasury Network (GPTN). This is Stripe’s programmable infrastructure for global money movement which spans 42 countries right now (and growing). This will make it much easier for Stripe’s customers to extend into Africa.

Africa’s super-app: Gozem

Super apps essentially serve as a single portal to a wide range of virtual products and services. Apps like WeChat and Alipay in China bundle together online messaging (similar to WhatsApp), social media (similar to Facebook), marketplaces (like eBay) and services (like Uber). One app, one sign-in, one user experience, for virtually any product or service a customer may want or need.

Earlier, we told you all about Gozem. Gozem is a Togolese startup that hit the ground running at the end of 2018. It has the ambitious goal of becoming West Africa’s all-inclusive “super-app”. And it has been so far, so good. 

Initially a motorbike ride-hailing service, Gozem quickly added car taxis and rickshaw hailing. It expanded to Benin and launched e-commerce delivery services. It acquired Togo’s leading food delivery app, Delivroum, in October, 2020. In December 2020, Gozem partnered with Asia Africa Investment & Consulting (AAIC), the investment manager for Africa Healthcare Fund to launch a new health-based service that targets the Francophone sub-Saharan African market via the Gozem app.

Fintech wins: Kuda’s seed round

Opportunities abound in resilient sectors like FinTech. Acceleration in digital transformation (increased digital adoption by businesses, uptake of digital platforms and innovative digital business models, rise in the digital urban consumer) are presenting interesting opportunities.

In January, Flutterwave closed a US$35 million Series B funding round to support its expansion into African markets. Meanwhile, Kuda is building a pan-African digital challenger bank and has received a banking licence from the Central Bank of Nigeria (CBN). In November, Kuda Bank announced that it had raised $10m in a seed round. Kuda Bank is Nigeria’s first wholly digital bank, where customers can carry out all their banking transactions without having to visit a physical branch. In 2021, with this funding, Kuda Bank is set to launch a proper B2B banking service to cater to the growing demands from its customers who have businesses. 

Startups acquiring startups 

M&A activity is happening in the African startup space, startups are doing the acquiring in order to beef up their product offerings. Startups active in this way in 2020 included Paga, Farmcrowdy, Snapplify, Autochek and AfricaSokoni.

In 2019, Lagos incubator Co-Creation Hub launched an ambitious pan-African expansion effort. It acquired the Nairobi iHub. This year, it acquired another Kenyan entity – e-learning startup eLimu. Recently, it launched the CcHub Syndicate, an investment vehicle supporting the most innovative vehicles in Sub-Saharan Africa.

Impact funding 

Earlier, a report from the African Development Bank (AfDB) showed that the pandemic could potentially drive the total number of people living in extreme poverty to 463 million. However, impact-driven funds had the opportunity to make a difference, and generate returns. In 2020, a host of new funds targeting startups at the pre-seed and seed stages launched, the key ones being Sherpa Ventures, Acuity and the Future Africa Fund. 


The future of Africa’s marketplace remains bright!

The trading phase under the African Continental Free Trade Area (AfCFTA), signed by 54 of the 55 countries in Africa, began on January 1, 2021. The AfCFTA has the largest number of member countries in any trade deal since the formation of the World Trade Organization.

It unites an estimated $3 trillion market, and could help to realise more than $84 billion in untapped intra-African exports. Tariffs will be drastically reduced and traders of all sizes will have access to a much bigger market than they used to before. According to the World Bank, the AfCFTA could lift millions of African people out of poverty by 2035.