H1 2020 Digest Africa Index: 24% drop in H1 Venture Funding, only 13% of funding to female co-founded startups

    Digest Africa H1 Report
    In Brief

The first half of 2020 has been a roller coaster of emotions for the continent. There has been a drop in funding of $115.5M (24%) in H1 2020 that raised $370.5M across 149 rounds compared to $486M across 193 deals of H1 2019. On a positive note, February recorded the highest number in deal count (34 deals) that valued $124.7M for the period, which is 226.4% more than $38.2M raised across 22 deals in February 2019. The effects of the COVID-19 pandemic which has caused a drop is funding for startups on the continent as fundraising plans continue to be re-evaluated and business models tested. Most investors are cautious and continue to fund existing portfolio companies and or sectors that are seeing upside from COVID-19 effects. Funding to women led or women co-founded startups remains low at 13% of all funding raised. From the stage of funding rounds, Africa remains broadly a nascent to evolving startup ecosystem.

Deals: H1 2020 saw 149 deals take place, which is a decrease of 44 (22.8%) compared to H1 2019. This is as a result of lower investor participation as investors are looking to invest in more established companies with more sturdy businesses that can weather the pandemic effects.

Funding: $370.5M of total funding was raised, which is a decrease of $115.5M (24%) compared to $486M raised in H1 2019. However, there was 226% more funding raised in February 2020 ($124.7M) than February 2019 ($38.2M). The largest round of the period was raised by South African-based Jumo – the startup raised $55M.

Industries: The Financial Services sector regained its first place and secured the most funding of the period with $122M, after a temporary displacement in 2019 from the Commercial & Professional services that got a big boost from Andela’s $100M raise. This was then followed by  Healthcare & Pharma and the Transport and Logistics sectors with $88M and $56.5M respectively. These turned essential services globally and therefore thrived. The Travel & Leisure took a hard hit with only one raise for the period from Wantotrip in a $65K Seed.

Countries: South Africa, Nigeria and Kenya continue to receive the lion’s share of total investment in Africa for another consecutive year, securing 31.6%, 25% and 20% of funds raised in the period. Startups based in these countries raised $117M across 43 deals (South Africa), $92.4M across 48 deals (Nigeria) and $75.5M across 30 deals (Kenya). The top individual startups attributed to these totals by country include Jumo’s $55M Series C raise, Flutterwave’s $35M Series B and Sendy’s $20M Series B. Previously, these countries were responsible for 9.6% (South Africa $46.8M), 52% (Nigeria $252M) and 16% (Kenya $78M) of total funding in 2019.

Funding Stage: Majority startups raised Seed (60 rounds amounting to $17M) with the largest deal from South Africa’s Carry1st. This is unlike H1 2019 where majority startups raised Grants (114 rounds) worth $9M. The largest deal however was a Series C (Jumo $55M). Per the most funded countries, the stages that raked in the largest fundraises in Nigeria was in Series A that valued $38.2M (5 deals) while in Kenya, the most valuable stage was Series B worth $48M (2 deals) and South Africa Series C worth $55M (1 deal.)

Diversity: Only 40 out of the 188 startups that raised funding are co-founded by women and raised $47.53M in total, the highest from financial service Sendy’s  $20M Series B backed by Atlantica Ventures, Toyota Tsusho Corporation, Asia Africa Investment & Consulting among other investors. Overall, H1 2020 saw a slow start in terms of deals and a sizable drop in vc funding. 

Investors: Y Combinator invested in 12 Africa-based startups dispersing funds to the tune of $1.8M making it the top investor of H1. MasterCard Foundation also participated in 11 rounds making investments worth $440K. Other top investors based on the number of investments made for the half include: Founders Factory Africa (9 deals, $360K), Villgro Kenya (9 deals, $400K) Flat6Labs (8 deals, $520K and Ventures Platform ( 7 deals, $14K).

Fundraising:  $672M in total was raised across 7 funds by GPs, the largest fund being Accion Quona Inclusion Fund managed by Accion with additional investment from Quona Capital and other undisclosed LPs. Novastar Ventures also raised a hefty $108M for the Novastar Ventures Fund Africa II with LPs CDC Group, European Investment Bank, Dutch Good Growth Fund, FMO, Proparco, Norfund and SIFEM followed by the $105M I&P Afrique Entrepreneurs 2 Fund by GP  Investisseurs & Partenaires with LPs African Development Bank, Japan International Cooperation Agency and France 2i.

Exits: UK-based Circle Gas Limited acquired Tanzanian KopaGas for $25M, the only disclosed acquisition for the month.

These are the top 20 deals of H1 2020.

STARTUPValue ($M) StageInvestors
Jumo55Series CGoldman Sachs | Odey Asset Management | LeapFrog Investments
Vezeeta40Series DGulf Capital | Saudi Technology Ventures
Flutterwave35Series BGreycroft | e.Ventures | Visa | Green Visor Capital | CRE Venture Capital
Skynamo30Series A Five Elms Capital
Sendy20Series BAtlantica Ventures | Toyota Tsusho Corporation | Asia Africa Investment & Consulting | Sunu Capital | Enza Capital | Vested World
Tymebank17Private EquityAfrican Rainbow Capital Financial Services Holdings
mPharma17Series CCDC Group | Dr. Daniel Vasella | Jim Breyer | Dompe Holdings
54gene15Series AAdjuvant Capital
Sokowatch14Series AQuona Capital | Amplo | Breyer Capital | Vertex Ventures | Timon Capital | 4DX Ventures
Chipper Cash14Series ADeciens Capital | Raptor Group | 500 Startups | Liquid 2 Ventures
NextProtein11Series ABlue Oceans Partners | Telos Impact | RAISE Impact | Mirova | Kepple Africa Ventures | Aucfan Incubate
Helium Health10Series AGlobal Ventures | Asia Africa Investment & Consulting | Tencent Holdings | Flying Doctors Healthcare Investment Company | Chrysalis Capital
Jet Motor Company9Series AAfrica Development Capital | Greatman Legend
Elmenus8Series B IIGlobal Ventures | Algebra Ventures | Tarek Sakr | Hamad Al Homizi
WhereIsMyTransport8Series ALiil Ventures | Global Innovation Fund | Goodwell Investments | Google | Nedbank | Toyota Tsusho Corporation
Mubawab7CorporateEmerging Markets Property Group
Apollo Agriculture6Series AAnthemis | Accion Venture Lab | Leaps by Bayer | Flourish Ventures
Instabug5Series AAccel | Amr Awadallah | Jim Payne
Tomato Jos4Series AGoodwell Investment | Acumen Capital Partners | VestedWorld
Wuzzuf4Post Series BEuropean Bank for Reconstruction and Development
TOTAL329

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