African Tech Startups received less funding for the first time after almost a decade of growth as investors in the ever-growing tech scene shied away due to the Covid-19 pandemic.
According to venture capital firm Partech Partners, companies in the continent raised about $1.43 billion in 2020, this is down 29pc from 2019. There were also just 2 deals above $50 million closed in 2020 compared with 10 in 2019.
“There were hardly any mega-rounds in the African tech ecosystem,” the firm wrote in its yearly survey of startups. “This sharp drop clearly marks the impact of the pandemic and subsequent lockdowns.”
Although Africa’s tech space is still relatively small, it represents one of the highest-growth areas for venture capital investment, investment in the area increased by 74pc in 2019.
African Tech Startups Performing Well
Startups that are doing well in the continent include payment platforms that are taking advantage of increasing internet access as more people get smartphones.
“Many startups who delayed fundraising to wait for better market conditions will be fundraising. So the deal-flow at growth stage should be larger than usual.” Partech Africa General Partner Tidjane Deme says.
Despite investors’ reluctance to invest heavily, the total number of deals rose 44pc according to the report.
Four African countries, South Africa, Nigeria Egypt, and Kenya received 80pc of the funds.