African tech startups defy volatile markets and double debt funding in 2022 - report

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African tech startups managed to double their debt funding raised in 2022, one of the few areas of venture capital managing to post growth in a market roiled by energy shocks and volatility in the wake of Russia's invasion of Ukraine, according to a report by funding platform Partech Partners.

While venture capital funding fell 35% globally in 2022, funding for the African sector grew 8% to $6.5 billion (R112 billion), through 764 rounds, with debt funding doubling more than doubling to $1.5 billion (R26 billion) in 71 rounds, compensating for a slight decline in the contribution from equity funding, Partech's 2022 Africa Tech Venture Capital Reads.

Nigeria, South Africa, Egypt and Kenya are still the hotspots for African venture investment, but in 2022, their contribution to the total volume was relatively flat at 72%. 

South Africa took second place behind Nigeria in equity funding and number four in deal count, with $830 million (R14.2 billion). While the amount of money raised was flat year on year, the number of deals fell 22%. SA accounted for 17% of the funding raised and 14% of the total deal count.

Venture capital
Partech Partners 2022 Africa Tech Venture Capital Report

The African continent remains a red-hot market for fintech investment, benefitting from favourable demographic trends as well as rapidly growing smartphone usage, but Partech said the market had not been unscathed.

"We can see the slowdown began to seep into the African market in the first quarter of the year, with a 14% drop in activity compared to the last three months of 2021. Despite this, African startups still closed record funding in the first half of the year. In the third quarter, the slowdown really kicked in, with a year-on-year decrease in the number of deals and funding raised," it said.

Partech, which was established in San Fransisco but is now headquartered in Paris, says it is one the most active tech investors in the world, bringing together capital, operational experience, and strategic support for entrepreneurs at seed, venture and growth stages.

The company manages more than €2.5 billion (R46.8 billion) and its current portfolio includes 210 companies in 40 countries in Africa, Asia, Europe and the US.

"It’s too early to tell how this strong overall growth in the African tech ecosystem will hold as the downturn is still unfolding, but the sector’s strong fundamentals are likely to maintain the progress made in recent years," Partech said.


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