Africa startups are raking in a lot of financial funds in the fintech sector, in the year 2020 and investors around the globe are keeping up with the recent trends. Last year Africa as a whole gained a high value of venture capital that exceeded the $725.6 million mark in 2018 by an extra margin of $500 million. Over 90 companies raised above $1 million each in 2019, with Nigerian fintech companies attracting the largest share of over $650 million.
Regular investors Goldman Sachs and other large corporate companies and international wealth funds are keeping tabs on the development of African startups. A Kenya-based food logistics startup Twiga Foods sealed a $23.7 million Series B round led by Goldman Sachs, also they pushed a Series A funding for Kobo360 a Nigeria-based freight logistics company. These investments are all part of the plan for pan-African expansion. Africa’s startup ecosystem is growing fast as not only are African companies attracting global capital but require the investments that are gotten from the investors.
Just like it has in India, corporate venture capital (CVC) can help with filling the funding gaps in rising markets and support the growth of the regional ecosystem. CVC is different from its counterparts which are traditional VC and PE firms who give a three to five-year cycle which gives companies less time to scale post-investment. Big companies in CVC have made moves of investment in Africa, one is Visa who recently just announced that it will acquire a 20% stake of Nigerian Payment Firm Interswitch for $20o million, Toyota setting up a venture arm mainly for Africa. Also some old but still big companies like MasterCard, Shell are investing in Africa’s growing fintech, clean energy, and mobility sectors.
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Aside from corporate companies, more international wealth funds are investing in the African market. Abu Dhabi’s state fund announced in October it will invest $250 million through two funds on technology startups in the Middle East and North Africa. Qatar Investment has already invested $200 million in Airtel-Africa.
Unrealistic valuations are creating concern in the ecosystem, but the entrance of investors who want to invest in Africa is a positive sign for the continent. Though the investments are still small in numbers it will is a stepping stone to attracting more global investors that can change the narrative that African companies are not a good mainstream venture capital.