Africa start-up funding more than doubled in 2021, report finds

In a groundbreaking report released by Brighter Bridges, it has been revealed that African start-ups have attracted close to $5 billion in total funding in 2021. Most of the investments were funneled into the continent's rapidly expanding financial technology sector. Joshua Haro-Murima, the head of investor relations at Brighter Bridges, recently shared these insights with CNBC Africa's Julius Bizimungu. The report highlighted a significant surge in funding compared to the previous year, with more than double the amount of investments seen in 2020. This influx of funds has sparked optimism for continued growth and expansion in the African start-up ecosystem throughout the current year. Haro-Murima attributed this remarkable growth to several key factors. Firstly, he pointed to the increased liquidity in the market following the initial funding constraints imposed by the COVID-19 pandemic. As economies gradually recover, investors have shown a renewed interest and willingness to back innovative start-ups in diverse sectors. Additionally, the accelerated digitization brought about by the global health crisis has paved the way for new business models and opportunities in industries like logistics, e-commerce, and B2B services. This wave of innovation has captured the attention of investors, leading to a surge in funding for tech-driven ventures. The report also highlighted a 25% growth in announced deals, underscoring the attractiveness of the companies securing these investments. Start-ups that demonstrated rapid growth and scalability were particularly appealing to investors, with many raising subsequent rounds of funding within a short timeframe. The confidence and appetite of investors in the African market have been bolstered by the success stories of these dynamic companies. Fintech emerged as the dominant sector within the African start-up landscape, attracting a staggering 62% of the total funding. Within Fintech, payment solutions garnered significant interest due to their versatility in servicing multiple industries such as agrifinance and healthcare. New product models including buy now, pay-later schemes and innovative banking infrastructure also captured substantial funding, driving the sector's overall growth. Several high-profile companies, including Tallah, Zipline, Andela, Flutterwave, and Chipper Cash, secured funding exceeding $100 million in single rounds. These companies share a common trait of targeting mass markets and operating across multiple geographies, attracting substantial investments from both domestic and international investors. Notably, the report highlighted the increasing interest in francophone Africa, emphasizing the region's potential for tech innovation and expansion. The harmonization of the region and the introduction of a single currency have eased operations for start-ups in francophone Africa, enabling them to scale more efficiently across multiple countries. Despite the ongoing successes in key countries like Kenya, Egypt, South Africa, and Nigeria, the report urged other regions to learn from their early-stage investment ecosystems. The presence of vibrant incubators, accelerators, and angel investment networks in these countries has facilitated easier access to capital for start-ups, setting a benchmark for developing regions to emulate. The dissemination of knowledge on venture capital as an asset class was also recommended to encourage more professionals and high-net-worth individuals to engage in the start-up funding landscape, fostering further growth and innovation in the African tech sector.