West Africa Venture Capital- Seed Stage Market Map

Published 1 November 2021
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In the first half of this year, we reported that VC activity in West Africa was off to a great start, and 6 months in, the value of deals had surpassed the 2020 total and was on track to beat the year prior with 92% of the 2019 total already raised by August 2021.

It has certainly been a big year for West African start-ups at all stages. One of our portfolio companies, Nigeria-based logistics start-up Alerzo, secured a $10.5 million USD Series A and acquired another of our portfolio companies, a Nigerian payments platform, Shago.

The West African region has also produced 3 new billion-dollar valued companies this year. Senegal-based  Wave and two Nigeria-based companies, Andela and Flutterwave.  

West Africa VC investment is booming

In 2021, West African technology companies secured $1.4 billion USD (excluding grants, prizes, and non-equity fundraises) over 122 funding rounds. This amounts to 45.5% of the total investment into African technology companies which currently stands at $3.08 billion USD over 383 funding rounds.

As we shared in an earlier report, VC funding in 2020 slumped slightly due to the Covid-19 pandemic totalling $1.44 billion USD over 682 funding rounds versus $2.56 billion USD secured in 2019 over 610 funding rounds.

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

As seen above, West African companies have secured the most investment in terms of deals value. West African start-ups this year have secured 191 of the 547 deals across the continent, 34.9% of total deals by proportion.

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

As we take a deeper look at the early-stage funding going towards technology companies in the region, we found West African start-ups secured $71.9 million USD over 67 funding rounds with 62 unique start-ups participating. SendboxTreepz (formerly known as PlentyWaka), RxAllMono and Sparkle announced 2 funding rounds each this year.

Pre-seed and seed funding has significantly increased in West Africa since 2018. Whilst the growth in later stage funding has grown steadily from 14 rounds in 2015 to 55 rounds in 2021, pre-seed and seed funding rounds have leapt from an average of 30 from 2015-2017 to an average of 101 between 2018-2020. In 2021, there have been 67 funding rounds equalling 59.2% of the 2020 total with 2 months left in the year.

This batch of start-ups is diverse in their service provisions. We see Eden Life in the household and personal sector connecting users to house cleaning services via an app, Definely, helping users draft legal documents online, and Seso Global, PropTech connecting users to homes in Nigeria.

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

In our report on FinTech in West Africa, we saw that this sector dominated in terms of investor attraction- garnering both more deals and funding than any other sector by a significant margin. The sector has attracted global attention with Nigeria’s Paystack being acquired by Stripe last year and international investors such as Japan’s Softbank, USA’s Sequoia Capital and Europe’s Target Global participating in the unicorn-making financial services rounds this year.

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

Similarly, in the early stages, financial service providers in the West African tech landscape are also leading in the deals closed. We see increased interest from early-stage investors with some investing in several start-ups this year. Kepple Africa participated in 12 of the 67 rounds (17.9%), for instance. Launch Africa and Future Africa participated in 9 of the disclosed pre-seed and seed funding rounds each this year, followed by Y Combinator with 6 rounds, Uncovered Fund and Techstars with 5 rounds apiece and Samurai Incubate investing in 4 start-ups.

The total number of investors participating in the 67 funding rounds was 170. It is great to see so many VCs willing to bet on the success of West African tech-enabled start-ups.

What can we expect from West Africa?

With increased interest in early-stage start-ups in West Africa, we have no doubt that there will be exciting news from the region over the next few years. Whether epic exits, record-breaking ICOs/IPOs or more unicorns, we cannot wait to see what is in store.

While Nigeria continues to secure the most rounds and funding, we hope to see more from other countries in the region. Senegal is another hub in the area that shows promise and is a great lead for Francophone Africa. Stay tuned for our report on the same.

What are your predictions? Let us know.