Equilibrium Zone

With the world being accustomed to new ways of shopping, learning, and doing business as a result of the Covid-19 pandemic, the desire for solutions that solve real, tangible problems are without a doubt the best opportunities for growth. As a result, new business ideas emerge every day with the aim of solving a human pain point problem in exchange for value. Often than not, many of these ideas are in need of funding.  As such, startup funding also known as startup capital is the money required to launch a new business. These are funds that can come from a variety of sources. They are used to help the startup go from ideation to actual business. Intrinsically, there are at least the top six sources of startup funding. Some of these startup funding sources include personal savings and credit, friends and family, venture capital, angel investors, banks, crowdfunding, accelerators, grants, series funding, etc. Most startups eventually metamorphose into series funding as they scale and reach more target audiences.

Series funding is essentially the process by which founders raise increasingly large rounds of fund in order to keep the startup running. This nature of startup funding begins with seed funding and then moves on to Series A, B through to D and even further if need be. Each series can include a combination of different types of funding – they virtually always include venture capital, most especially in the later stages of the funding. Essentially, startups that are ready to raise a Series B round of funding have found their product/market fit and eventually need help expanding.

VC Startup Funding Landscape in Africa

The venture capital and entrepreneurial landscape in Africa has been experiencing rapid growth in recent times. Originating from the continent’s robust macroeconomic progress from 2000-2016, the combination of a growing consumer base, external inflows of investment, and entrepreneurial business solutions addressing African consumer needs and structural problems has accelerated venture capital  investments in Africa. A few African countries have pursued policies that permits a conducive business environment for startups and small businesses to thrive. Nations like Tunisia and Senegal have passed VC friendly legislation. In the same manner, Ghana, Rwanda and Mali are currently chasing similar policies.

Fortunately, startups in Africa are altering the continent’s economic landscape and also creating new market opportunities. The larger part of VC funding in Africa focuses on early stage rounds. Report shows that seed funding accounted for 33% of VC deals between 2014 and 2020, while Series A and B accounted for about 43% of the deals. Nigeria and Kenya continues to be hotspots for African VC investment with $307 million and $305 million raised in 2020, respectively. South Africa also remains a center for VC activities in Africa, raising about $259 million – accounting for 21% of deals by volume. Egypt is gradually gaining popularity also among investors with $269 million of funding, attracting the second-highest (16%) share of country-specific deals in Africa in 2020.

Recent Trends in the VC Startup funding in Africa.

With global interest rates at an all-time low and African tech hubs in Cape Town, Nairobi, Lagos and Cairo maturing to levels needed for a startup ecosystem to thrive, there is an ever-increasing demand from international investors to invest in African startups. The current boom in VC funding in Africa, did not just start. It has been gradually building over the last five years. The prospect of the African market, among other things, has attracted and called the attention of VC into the continent.

African startups in the first half of 2021 raised $1.19 billion in funding, a figure which is more than they had raised in the first half of 2019 and the first half of 2020 combined. Report has hinted that 80% of the funding was raised by startups with their headquarters in one of Africa’s ‘Big Four’ – Nigeria, Kenya, South Africa and Ghana. South Africa and Nigeria are also reported to be in the league of their own with both countries attracting more than half of all the funding raised on the continent – 28% and 27% respectively.

According to a report released by AfricArena, the venture capital funding for African startups is estimated to amount to between $2.25 billion and $2.8 billion this year. By 2022, venture capital investments are expected to experience a sharp climb to between $3.8 billion and $4.7 billion. The forecast is further expected to hit $10 billion by 2025.

Fintech among other sectors remains the most funded sector in Africa. This year 2021, about 48% of funding went to fintech startups.  Some of the outstanding funding rounds were closed by Kuda, Flutterwave, Termii, Kwik, Bankly, and Appzone, with Flutterwave leading the way with a momentous $170 million Series C raise to become the third payments unicorn in Africa. Trends are further showing that startups with all-male founding teams taking most of the funding with 77%, while female CEOs are able to own 14% of the funding – from 2% for the same period in 2020. 

Google has currently announced a plan to invest $1billion over five years to support digital transformation in Africa. The tech giant also launched a $50 million investment fund for African startups over the five-year period. This was announced at the first-ever Google for Africa event on Wednesday, 6th of October, 2021. Targeted at early- to growth-stage startups, selected companies will be provided with access to Google’s employees, network and technologies, to help them build products. To cater for small businesses and entrepreneurs, Google is collaborating with non-profit organization Kiva to provide $10 million in low-interest loans to help these small businesses and entrepreneurs in Ghana, Kenya, Nigeria and South Africa get through the economic hardship due to the COVID-19 pandemic.

Some current notable VC Startup funding in Nigeria

Fortunately, many startups from Nigeria have engaged in many of the VC investment rounds and have benefited, most especially in the first half of 2021. Being one of the ‘Big Four’ in the continent, Nigeria remains one of the major places with VC startup funding with serious prospects in the future. 

Some of the Nigerian startups that have engaged in VC funding rounds in 2021 include; 


Plentywaka, a service for booking buses, cars or vans, raised a $1.2 million seed round in August.  Founded in Lagos, Plentywaka provides intercity travel across 21 cities in Nigeria. The company has arranged more than 500,000 rides since its founding in 2019. The startup has recently acquired a similar company in Ghana called Stabus, with plans to expand to more countries.


Andela, a global engineering talent outsourcing company, secured $200 million in a Series E funding round led by Softbank at a $1.5 billion valuation. The funding round has raised the total venture funding to $380 million. 

Launched in Nigeria in 2014, Andela started as an African-focused software developer training and outsourcing company. In July 2020, Andela changed its model and closed its physical offices in Nigeria, Uganda, and Rwanda to become a fully remote company. The rationale for the move at the time was specifically to increase the number of Africans who could apply to work for the company as software developers. Roughly a year later, it expanded its talent pool to welcome Latin and South American developers.


The Nigeria-based OPay also secured $400 million in funding at a valuation of $2 billion dollars in August. It is the single-largest investment round secured by an African-based startup and marks the first investment in a startup on the continent by the SoftBank Vision Fund. Founded in 2018, OPay raised two investment rounds in 2019 – $50 million in June and a $120 million Series B in November.  The company formerly offered ride-hailing and logistics services as well but shut down the former in 2020 due to a government ban on motorcycles in Lagos. Furthermore, the fintech company experienced lunar growth during the global pandemic lockdown in 2020 with the value of its gross transactions rising to over $2 billion in December. 

These and many other Nigerian startups have engaged in funding rounds with good valuations. We are anticipating more VC rounds from 2022 as new and other startup businesses plunge into the VC pool. 

Finally, with the noticeable upturn in funding in Africa, it seems that African startups are doing a lot of things right. With the current trend, we can confidently say 2021 is on its way to breaking the Africa funding record in 2019. There are no doubt, indications of the future influx of VC investments in Africa – this would give room for many business ideas and startup companies ready to solve real pain point problems in Africa to thrive in the evolving African economic landscape.

Leave a Reply

× Hello, do you have any question you like us answer?