In 2017, African fintech businesses pulled in almost a third of total funding raised by startups on the continent. It looks like 2018 is no different and more big-ticket deals in 2018 are still coming from African fintech startups.
Overall, Kenya, Nigeria, and South Africa remain the top countries with the highest funding raised, which is consistent with previous years of funding.
Fintech Startups with Major Funding in 2018
Some of the top fintechs that have raised successfully include:
- Branch – $70 million raised in Series B to further provide credit to its 1 million unique users. The company plans to expand into savings and payments in future.
- Tala – $65 million raised in Series C as equity and to fund its global expansion.
- Cellulant – $47.5 million raised in Series C to expand into more countries
- Yoco – $16 million raised in Series B for product development and expand its merchant network.
- Mines – $13 million raised in Series A to hire talent, expand into Africa and beyond.
- Paga – $10 million raised in Series B2 to expand into Africa and other markets.
- Paystack – $8 million raised in Series A to expand into its home country and beyond.
- SureRemit – $7 million raised in an ICO to develop its non-cash remittance platform.
- Lidya – $6.9 million raised in Series A to hire skill, expand its loan book, and scale into Nigeria and new markets.
Why Investors Love Fintech Startups
The growing need for financial services across Africa is a major driving force into why fintech startups continue to be prominent on investors’ radar. This growing need helps solve the problems below:
- Powering payments
- Facilitation of savings
- Bringing financial inclusion to the unbanked
- Access to credit for small businesses and individuals
Fintech startups are also seen by most investors as an ‘easier space for foreigners to understand and get their heads around,’ according to CEO of Paga, a Nigerian fintech startup. Indeed, the success of fintechs is also seen as enabling and easing friction points around payments which will also contributes to the success of startups in other sectors.
An increasingly good number of Silicon Valley venture capital firms have taken notice of the fintech space in Africa and are looking to get a piece of the pie as well. Some of these include Stripe and Visa among others.
Thanks to the success of mobile money like M-PESA, investment in fintech startups, especially across countries like Kenya, is seen as an easy win due to the high affinity for mobile money transactions.
Fintech is projected to contribute close to $150 billion to Africa’s GDP by 2022. This is an increase of about $40 billion, according to FSD Africa.
Whether regulation will allow the fintech industry to grow and innovate however remains to be seen. For now, investors and fintech startups are hopeful that such regulations will encourage innovation rather than stifle it.