Kenya Startups Saw the Highest Growth in Funding in the First Half of 2022
- Tech News
- August 11, 2022
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Kenya is currently behind Nigeria in terms of the number of deals and amount of funds raised. According to Big Deal data that only look at deals that have been announced, Nigeria leads with 160 deals and raised $864 million in funding. Compared to Kenya, which saw funding growth of more than 400%, Nigeria saw a 128% increase in funding growth compared to the first half of 2021. Last year, Nigeria raised nearly $41.8 billion in financing. The country was the top destination for venture capital investments last year and with the pace, Kenya is going, this year it is not impossible to top Nigeria’s title.
In a previously published article titled “Amid Global Downturn in Startup Funding, Africa Continues to See a Funding Boom,” we discussed how Africa is not slowing down in terms of funding compared to startups in other countries/ regions that are declining in the wake. of current macroeconomic realities. We highlight how the disadvantaged population of Africa has overcome the impact of factors such as inflation, slowing economies, etc., and how Africa remains a center of finance in the midst of a global trend of slowing investments, layoffs, bankruptcies, etc., which has taken the tech/startup field by storm.
In this article, we will dive deeper and compare startups from different parts of Africa and how they performed in the first quarter. But before that, let’s summarize some of the numbers startups in Africa have compared to their counterparts in other parts of the world. According to research firm Africa: The Big Deal, African startups received $3.14 billion in the first half of 2022. Europe saw a 3.7 percent drop in funding, while Latin America and the Caribbean saw a 43 percent drop. African startups have already raised $1.3 billion in the current second half, adding to the $3.14 billion raised in the first half of the year.
While startups in Africa collectively raised $3.14 billion in funding in the first half of the year, startups in Kenya raised nearly $1 billion of that amount in the first half of this year. This year, Kenyan startups surpassed what they raised in the first half of last year. Normally, one of the big four countries (Nigeria, Egypt, South Africa, and Kenya) is expected to receive the most funding due to various factors, but this year Kenya has outperformed the funding growth forecast. The country has made its greatest progress so far this year.
According to Big Deal data, Kenya raised a total of $820 million in the first half of 2022 and this was achieved through 76 deals. Compared to the same period last year, when startups in the East African country raised $157 million, this year has seen 422 percent growth.
Startups in Kenya showed the most growth this year. This is because, according to different data compared to this article, startups in Kenya raised between $400 and $600 million in startup funding throughout the past year. The company ranked fourth last year in all of Africa in terms of funding. Another of the Big Four. Last year, the Big Four raised nearly $2 billion in funding for startups.
So far this year, Egypt and South Africa trail Nigeria and Kenya ranking third and fourth, respectively. Egypt has concluded 71 deals and $538 million in funding so far, while South Africa has secured 53 deals and $392 million in funding so far this year. However, Egypt recorded the second highest growth in financing after Kenya. Egypt saw an increase in funding growth of 244% in the first half of 2022. Nigeria followed in second place, and South Africa, which was the second largest destination for venture capital investments last year, saw a growth of 2% margin on venture capital financing. Together, the Big Four companies account for 87 percent of the total funding raised by African startups.
Kenya Startups Saw the Highest Growth in Funding
The growth that Kenya experienced in the first quarter of this year is quite remarkable given the current business environment and macroeconomic challenges facing businesses around the world. While the rest of the world struggles with challenges like inflation, the case may be different only for African startups. “The macro trends affecting tech names in developed markets will have less of an impact in Africa. Klarna, Paypal, and others are exposed to concerns about inflation and what that means for consumer transactions,” said Lexi Nowitzki, general partner. from Norrsken22, a company from Africa. focused technology fund created by the company’s founders. Emerging Swedes, Africa’s story tries to bring the under-penetrated market online.
The increase in deals coupled with the size of these deals has pushed Kenya to the top of the waiting list. The company saw notable deals worth more than $100 million in the first half of 2022, two of the most significant in Sun King’s $260 million Series D financing and $125 million in platform financing. Wasco e-commerce and retail.
The increase in deal flow into Kenya is indicative of the growing interest in African startups and the rise of venture capital funding within the continent. Although Africa has the smallest share of funding worldwide, it posted the highest growth in the first half of this year. With $3.14 billion raised in the first half of this year, the continent doubled what it raised last year. Africa also has the highest growth potential. According to Big Deal, “If we look at the annual evolution of quarterly funding (compared to Q2 2022 and Q2 2021), Africa is simply the only region that has continued to grow year over year.”
Fintech remains the largest category on the continent, and Africa is the second-fastest-growing banking and payments market in the world, behind only Latin America, according to a McKinsey study. If funding in Africa continues down this path, seed funding could top the record $5 billion raised in 2021.
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