Venture Capital Investment in Africa Predicted to Reach a Record High this Year

Investments in African startups have been growing at a healthy pace since the start of the report count in 2015. That year, the publications disrupted Africa and Partech separately, revealing research and contrasting figures showing that venture capital investment hit c186 million and $277 million, respectively. These are ridiculously low images for a continent when you consider that four-year-old Snapchat. 

However, while money disparities between startups in Africa and the single high-growth United States continues, the good news is that more money is coming to the continent. In 2019, African venture capital investments reached an all-time high, according to Partech’s report. According to Partech, 234 African tech companies have raised ০ 2.02 billion in 220 equity rounds. This indicates a 74% increase from the 2018 figure of $1.163 billion by 146 startups in 164 rounds. Share was optimistic that 2020 would set a new high, but that was before the epidemic hit.

That’s why African technology ecosystem accelerator African Arena predicts that venture capital funding will fall between $1.2 billion and $1.6 billion by the time the continent launches. As can be described as a forecast calculated by educated estimates or publications, year-end reports from Partech and Briter Bridge called for a total investment of $1.4 billion and $1.3 billion, respectively.

This year, the African Arena predicts in a new report that VC funding will increase between $2.25 billion and $2.7 billion by the time the continent launches, surpassing 2019 figures for a record high on the continent if it is met. Here is the reasoning behind the prediction from a part of the report:

We predict that the first two quarters of 2021 will be the same national Q4 2020 with a mix of components. Vaccine promotions will probably take longer than expected to have a meaningful effect. However, this rollout – regardless of how long it actually takes – will remove major uncertainties about the end of the epidemic, which is just a matter of time. As a result, we expect a final sharp acceleration of the deal from Seed to Series B and the growth combined with some IPOs (e.g. Nigerian Interswitch), which has not seen contract activity before the level of activity seen.

As of April 2020, our forecast for 2021 is from $1.6 billion to more than $3 billion. The worst case scenario was based on the long-term and fragmented impact on the African economy and the full recovery scenario in Q1 2021.