Southern Africa Venture Capital- Seed Stage Market Map

Published 8 October 2021
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The Southern Africa Venture Capital and Private Equity Association (SAVCA) gathers data and publishes reports on the regional venture capital landscape. In their 2020 report, published earlier this year, we saw that despite the crisis brought by the global pandemic, South African tech start-ups received more deals and increased funding.

Southern African VC investment grows.

There has been a rise in the funding going towards Southern African technology companies this year. Total funding in 2021 beats that of the previous 2 years, with $452.1 million USD and $149.8 million USD (excluding grants, prizes and other non-equity deals) secured in 2020 and 2019 respectively by Southern African technology companies.

Figure 1: Total funding secured by companies in Southern Africa as a proportion of funding across the rest of Africa since 2018

Compared to funding across the rest of Africa, the region has not drawn as much funding as might be expected. This year, Southern African start-ups have raised $563.8 million USD, less than 15% of the continental total. By comparison, West African start-ups have secured a whopping $1.9 billion USD in 2021 alone, nearly 4 times as much as the Southern Africa region.

Rounds disclosed as pre-seed and seed-stage investments are in decline. This year, 23% of deals in Southern Africa were pre-seed or seed-stage rounds, compared to nearly 50% in 2020 and 2019.

This year, pre-seed and seed-stage deals accounted for $17.9 million USD across 27 funding rounds. The highest round went to the InsureTech Ctrl, with $2.29 million USD raised in a seed funding round. The funding round was led by Naspers via Prosus Ventures.

Figure 2: Total pre-seed/ seed stage deals closed by companies in Southern Africa as a proportion to funding across other stages since 2015

VC is hot in Southern Africa.

Earlier this year we reported on South Africa’s venture landscape where our analyst team mapped out 44 of South Africa’s active VC funds. 

The VC landscape in Southern Africa is well supported as investor interest in the region heats up. We see a mix of Africa-focussed investors like The Baobab Network and Musha ventures taking part in pre-seed and seed-stage venture rounds alongside international names like Sequoia.

FinTech Focussed Funding?

Across Africa, FinTech continues to dominate in terms of the number of deals closed in 2020 and 2021. Companies in the financial services sector raised $168.1 million USD across 44 seed and pre-seed funding rounds. This is a considerable increase in value from 2020, where $44 million USD was raised over 67 funding rounds.

The proportion of FinTech funding rounds increased between 2020 and 2021 from 22% to 26% of total funding rounds across all sectors. However, some sectors recorded a decrease in the number of deals with transport and logistics, healthcare and education sectors recording a 2% drop each in 2021. The eCommerce sector recorded a 4% increase from 10% in 2020 to 14% in 2021. 

Figure 3: The proportion of deals closed by all start-ups across all geographies and stages in 2020 and 2021

In Southern Africa, the same sector preference holds true as we note that of the 15 VC-backed start-ups to secure seed-stage funding, AkibaBentoFloat Pays and Stitch provide financial services. Tied in second place in terms of the number of seed-stage deals with 3 rounds each are the healthcare and agriculture sectors. FeelGood HealthStrove, and Quro Medical are the HealthTechs that secured seed funding this year. 3DIMO, one of The Baobab Network’s portfolio companies and Techstar 2021 start-up,  Agrikool and Imfuyo Technologies are AgriTechs.

Financial services and healthcare companies accounted for a growing number of seed-stage deals. In 2019, both sectors closed 15% of seed-stage deals which grew to 22% in 2021 (figure 4). Transport and logistics recorded a significant drop from 10% to 3%. With no disclosed pre-seed and seed-stage funding in 2020, the agriculture sector recorded a 16% increase in the number of deals in 2021

Figure 4: Proportion of seed-stage deals closed by Southern Africa companies in 2020 and 2021

What’s next for Southern Africa?

This year we have seen huge investments into African FinTechs. In Southern Africa, Tyme Bank, a digital bank, secured $109 million USD in a venture round and, Yoco, a POS merchant service, raised $83 million in a Series C funding round.

As for seed-stage funding, will we continue to see growth in the region? It is worth noting that we are recording more diversity in the sectors of interest with companies like MyFanPark, which gives users access to personalized interactions with celebrities, secure seed funding. 

However, we lack diversity in the countries of interest in the region as South Africa continues to bank around 90% of all VC funding invested in the Southern Africa region in 2020 and 2021