Fintech dominates African startup funding

Fintech took the lion’s share of startup funding, but startups across the board saw growth and other sectors are on the rise.

Fintech continued to account for the majority of funding among African startups, according to a report by news portal Disrupt Africa. The report was created in partnership with Flat6Labs, MarketForce, 4Di Capital, Mercy Corps Ventures, Newtown Partners, and InsiderPR.

Now on its eighth edition, the annual report found that tech startups saw increased growth, with 633 startups raising a combined USD 3,333,071,000 in 2022. The number of funded startups increased by 12.2% from 2021 and the total funding increased by 55.1% from 2021.

Fintech dominates funding

Fintech continued to receive the majority of the funding across Africa, with another record year. This continues an ongoing trend in both Africa as a whole and the MENA region. However, the sector’s total share of the funding shrunk as other sectors grew.

According to the report, 205 fintech startups (32.4% of the total startups covered), raised USD 1,446,794,000, or 43.4% of the continental total.

Nigeria and Egypt lead the field

As before, Nigeria accounted for almost 40% of the fintech startups and USD 666,392,000 (46.1%) of funding. Notable deals included Flutterwave, Moove and Yellow Card. Egypt also performed well, with leading deals including MNT-Halan, Paymob and Khazna.

Overall, Kenya, Nigeria, Egypt, and South Africa continued to represent the four largest markets.

Sectoral growth

While fintech funding increased, its overall share of investment fell. The e-commerce and retail-tech, and e-health sectors all grew faster than the fintech sector and have established themselves as the clear second- and third-place sectors in terms of investment.

74 e-commerce and retail-tech startups raised a combined USD 556,761, 16.7% of the total and representing growth of 70.7% from 2021. This rise is also seen in the MENA region, within the e-commerce and logistics sectors. Across Africa, e-commerce saw a 70.7% rise in funding compared to last year, with retail-tech also growing and healthtech raising a combined USD 189,103,000, or 5.7% of the total funding.

According to the report, 11 sectors saw increased levels of growth in 2022. While fintech remains on top, the entertainment, marketing, transport, recruitment and agri-tech, as well as e-commerce and health sectors saw faster levels of growth.

The full report can be downloaded here.