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Firms in the financial technology segment have maintained their dominance of the innovation space in Africa as they accounted for 33 percent of the more than $543 million funding raised so far in 2019.
Data published by Maxime Bayen, Company Builder at GreenTec Capital Partners and former analyst at GSMA, showed that 66 tech startups received more than N1 million each from over 130 investors from January to date.
Startups in South Africa led the table with 9 firms while Nigeria came in second with 7. In terms of the value of the deals, the 9 South African fintech startups received about $78.8 million compared to Nigeria’s $78.5 million.
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Africa’s Fintech ecosystem has surged 60 percent in the last two years and the continent’s Fintech firms have grown to 491 from 301 in 2017, with $132.8 million raised in 2018 accounting for 39.7 percent of total funds raised according to estimates from TechPoint Africa. This was an increase on previous years.
Nigerian fintech firms have also etched their initials at the top three spots of the most funded startups on the continent since 2017. The likes of Flutterwave, Paystack, and Paga have led the bulk of funding traffic to the country.
However, as the year 2019 draws to a close a major milestone that could be singled out is the first $5 million equity funding by a Nigerian investor. Jim Ovia’s Quantum Capital invested $5.5 million in fintech firm, TeamApt. Local investment is a blindspot of the ecosystem as more than 80 percent of funding comes from foreign venture capital firms and institutions.
The $78.5 million raised so far by Nigerian fintech firms falls short of the $132.8 million raised in 2018. Part of the reason for the decline is investors’ growing interests in other tech segments such as transport, logistics, health, and education. Startups in the ride-hailing space have drawn significant attention from investors as new businesses open up in the segment across the country.
It should also be said that not much in terms of innovations have come from the fintech space in 2019 compared with 2018 when new services were launched nearly every month. Notwithstanding, space has witnessed more consolidations than in previous years. For instance, 2019 saw the acquisition of a local fintech startup, Amplify by another fintech startup, Carbon former Paylater. Most of the startups also worked on strengthening their brands. Paylater changed to Carbon, PiggyBank became PiggyVest while Kudimony transformed to Kuda.
With barely 2 months to the end of 2019, there is still every reason to hope the funding numbers will surpass that of 2018.
