When it comes to investments on the African continent, 2021 is set to be a record-year in terms of total size of deals closed.
Investors have already poured $1.19 billion into African startups in the first half of the year.
In this article we will offer a snapshot of investment activities that have gone down in H1, 2021.
Location
There are over 600 investment organizations with operations on the continent. These are usually private equity, venture capital, and asset management firms.
400 of these organizations have headquarters or regional head offices in various parts on the continent:
- 174 are in South Africa
- 63 in Nigeria
- 48 in Kenya
- 24 in Mauritius
- 20 in Egypt
Outside Africa:
- 87 are based out of Europe
- 83 in the US
- 25 out of Asia & the Middle East
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Assets Under Management (AUM)
As reported on the African Report, the assets under management are known for just a third of these firms.
Below is the breakdown:
- 50 firms are known to manage more than $1 billion, which is less than 10% of all firms
- 65 manage less than $1 million
- 40% of firms manage assets in the range between $1 million & $1 billion
Sector Preference
It is now well established that financial technology (fintech) is the most attractive investment destination in Africa.
47% of deals already closed this year have been in the fintech sector.
As first reported on the Africa Report:
- More than 200 firms have invested in financial services
- IT, Healthcare, Energy, and Agriculture among the most attractive destinations of capital
In terms of regional focus, investment firms have made:
- 301 deals in southern Africa
- 230 in East Africa
- 212 in West Africa
- 90 in the North
- 68 in central Africa
Ticket Size
A closer look at the report also reveals the size of these deals as follows:
- 23.5% of the investors operating on the continent typically invested between $1 – $5 million
- 21% invested between $5 – $10 million
- 21% preferred to invest $10 million cheques
- 14% preferred investing under $1 million
- 4.5% made $100 million investments
With $3.3 billion invested in 2020, 2021 is on course to be another breakout year for African startups with $1.19 billion raised so far.
While big deals involving global money are more likely to make headlines, the investors operating on the continent are keen on small and medium sized startups with this trend likely to continue as the investment space in African continues to mature.
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RECOMMENDED READING: The Andreessen Horowitz (a16z) $2.2 Billion Crypto Fund III and What it Means for Africa
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