In 2020, equity commitments targeting Africa fell for the first time in five years (report)

(Ecofin Agency) – Since 2015, equity fundraising by African tech has been on an upward trend. Covid-19 slowed this momentum in 2020, with the first drop in the overall amount of funds raised, according to the latest report from Partech Africa.

After five years of continuous growth, the overall amount of equity funds raised by African start-ups saw its first decline in 2020.

The total funds raised stood at $ 1.43 billion in 2020 against $ 2.02 billion in 2019, a decline of 29% in one year. However, African tech had started a steady progression of these fundraising since 2015.

In his fifth annual report on African technology start-ups, published on February 11, Partech Africa, the venture capital fund dedicated to African companies, explains this situation by the effects of the global covid-19 crisis, but also by the absence of mega-towers, that is, fundraising over $ 50 million.

“The main factor in reducing the total amount of equity raised seems to be the disappearance of mega-towers. Besides that, this sharp drop clearly marks the impact of the pandemic and the measures related to containment ”, underlines the investment firm.

In such a context, investors preferred to slow down their processes and entrepreneurs postponed their fundraising pending a more favorable climate.

From $ 277 million mobilized in 2015, we fell to $ 367 million in 2016, $ 560 million in 2017, $ 1.1 billion in 2018, then $ 2.02 billion in 2019, then the drop in 2020 with 1.43 billion $.

Although the drop in fundraising in 2020 weakens the African technological ecosystem, Partech nevertheless notes that African tech has shown resilience through the increased digitization of key economic sectors such as agriculture, health or energy.

A good performance noted in 2020 is the strong growth in deals concluded. 359 equity fundraising operations were carried out in 2020, an increase of 44% compared to 2019.

Chamberline Moko

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