Telecom

VC funding: African startups are doubling down on peer acquisitions (report)

VC funding: African startups are doubling down on peer acquisitions (report)
Friday, 03 February 2023 16:14

Established African startups, looking for new avenues for profitability, are increasingly searching for competitors they can acquire to enter new markets, expand product lines or access innovative technologies.

Consolidation is accelerating in the African tech scene amid a cooling venture capital market, a frantic search for profitability, and a search for new growth opportunities, according to "The State Of Tech In Africa Q4 2022 Report" published by TechCabal Insights last Thursday.

According to the report, African startups made 48 acquisition deals on the continent in 2022, up 33% compared to the 32 deals made in 2021.

Fintech startups accounted for 25% of those deals, against 10% for B2B marketplaces and 8% for e-commerce startups.

The report indicates that acquisitions between African start-ups are expected to increase in 2023, with established start-ups buying up struggling start-ups whose valuations have fallen, to expand their product range, enter new markets, or get their hands on innovative technology. This consolidation will be helped by drying venture financing due to macroeconomic uncertainties that weigh on investors' ability to plan for the medium and long term, as evidenced by the decline in fundraising by start-ups on the continent in the second half of last year.

Four countries account for 75% of fundraisings

TechCabal Insights also reveals that African start-ups raised US$4.84 billion from venture capital funds in 2022 in 875 deals. In 2021, they raised US$4.6 billion in 847 deals.  

Fintech companies accounted for 37% of the funds raised (US$1.81 billion) while in 2021, they accounted for 53%. Next in line are startups operating in the fields of energy and water (US$874.1 million), logistics & transportation (US$620.5 million), e-commerce (US$455.2 million), agriculture & food (US$246.8 million), and telecoms, media & entertainment (US$246 million).

Eight mega funding rounds  (over US$100 million per deal) were recorded in 2022, including the rounds by Nigerian fintech company Flutterwave (US$250 million), Kenya's Sun King (US$260 million), and Algeria's VTC Yassir (US$150 million).

Four countries accounted for about 75% of the overall VC financing raised on the continent in 2022. They are namely Nigeria (US$1.2 billion) Kenya (US$1.06 billion), Egypt (US$822 million), and South Africa (US$555 million).

The report also indicates that the continent's start-ups laid off 1,264 employees last year, mainly due to funding scarcity after funding increased eighteenfold between 2015 and 2021. The African startups that laid off staff include  Egyptian mobility start-up SWVL (400 layoffs), the Senegalese unicorn Wave (300 layoffs), and the Kenyanagritech Twiga (211 layoffs).

On the same topic
MTN has announced the launch of the MTN Cloud Accelerator, a 12-week hybrid program designed to help African startups scale faster by leveraging MTN’s...
Flutterwave gained a BCEAO license to operate in Senegal, expanding to 35 African countries. It targets growth in Africa’s booming $1.5T...
Nigeria plans to retrain ex-cybercriminals for careers in digital security and tech. A new academy will launch with 500 trainees, expanding later...
Reliable, high-capacity international connectivity is crucial for driving economic growth, enabling digital services, and promoting regional...
Most Read
01

• Inflation within the West African Economic and Monetary Union (UEMOA) fell to a two-year low of 0....

UEMOA: Inflation Drops to 0.6% in May, Driven by Lower Food Prices
02

• Interbank volumes rose 18.7% in May, while rates declined across the market• The BCEAO cut its mai...

WAEMU Sees Easing Conditions on Regional Interbank Market
03

• The U.S. imposed a 20% tariff on cashew exports from Vietnam and a 40% tax on suspected transshipm...

U.S. Tariffs on Vietnam Cashews May Disrupt Trade, Hit African Growers (Interview)
04

Cauri Money launches Gajo Money, an e-wallet for the Cameroonian diaspora, targeting €120 mil...

Cauri Money Targets Cameroonian Diaspora with Digital Wallet Launch
05

• Qatar Airways and Kenya Airways establish strategic agreement, introducing a third daily flight be...

Qatar Airways Expands its Network in Africa, Building Presence in Kigali, Johannesburg, and Nairobi
Enter your email to receive our newsletter

Ecofin Agency provides daily coverage of nine key African economic sectors: public management, finance, telecoms, agribusiness, mining, energy, transport, communication, and education.
It also designs and manages specialized media, both online and print, for African institutions and publishers.

SALES & ADVERTISING

regie@agenceecofin.com 
Tél: +41 22 301 96 11 
Mob: +41 78 699 13 72
Média kit : Download

EDITORIAL
redaction@agenceecofin.com

More information
Team
Publisher

ECOFIN AGENCY

Mediamania Sarl
Rue du Léman, 6
1201 Geneva
Switzerland

 

Ecofin Agency is a sector-focused economic news agency, founded in December 2010. Its web platform was launched in June 2011. ©Mediamania.

 
 

Please publish modules in offcanvas position.