Deep Dive: Rise of African Investments

Max Fleitmann
Founder of VC Stack
Deep Dive: Rise of African Investments
Uma Patel
VC Content Creator

This deep dive was initially published in our VC Stack newsletter. Make sure to subscribe here to not miss any future episodes.

The African Tech Ecosystem

In 2021, Africa defied all the odds and grew faster than any other region amid global VC growth. The year ended with 3x the amount of investment and 2x the activity of 2020: $5.2B in total equity funding across 681 rounds. The attention garnered by this monumental growth led thousands to join the conversation on the rise of African investments and the future of the continent’s tech ecosystem. With Africa representing close to 20% of the global population and capturing 1% of global VC funding, it remains a relatively untapped market.

We had the opportunity to hear from three investors in the space: Tamim El Zeim from Seedstars Africa, Diego Arias García from Plug and Play and Hossam Shafick from Silicon Badia. All of whom pointed to the continent's macro trends as massive opportunities in the coming decade. With young consumers going online, the projected growth of the middle class and the vibrant markets eager for innovative ideas.

What Can Benefit Growth?

  • Young Population. Africa has one of the youngest populations in the world, with 70% of Sub-Saharan Africa under the age of 30 (United Nations). This presents a promising opportunity for economic growth, provided that the proper support systems are in place to cultivate a talented workforce.
  • Training & Mentors. Building a talent pool means prioritizing access to training programs and entrepreneurial opportunities for young Africans. Mentorship can also aid in navigating the complexities of running a startup and avoiding common roadblocks.
  • Vast Diaspora. The African diaspora consists of approximately 140 million individuals spread across America, Latin America, Europe, and the Caribbean. Maintaining connections to the continent promotes foreign investments, start-up advisory, and encourages cross-collaboration.

Hossam Shafick sums up quite well why he is so excited about investing in Africa: "Not only is Africa a sizeable, growing population, but it’s also one that loves the internet - 2 in every 3 Africans use the internet, some of whom don’t even have access to clean water! (according to the World Bank) ".

Challenges: Regulations & Gender Gaps

  • Regulation. There’s still a lot of progress that needs to be made to create enabling environments for startups. Setting a clear legislative framework for expansion allows startups to operate with confidence and certainty. In 2018, Tunisia’s Startup Act called for legislation that defined a startup and offered incentives to pursue entrepreneurship. Senegal, Congo, and Nigeria have since signed startup bills and a number of other African nations are close behind.
  • Although this is a huge step forward Pan-African advisory firm, AR initiative, makes clear that:
  • Startups exist in an ecosystem – hence, it is futile to simply enact the Act without a long-term, holistic, and well-coordinated approach that factors in the startup ecosystem, as well as clear-cut monitoring and evaluation clauses.
  • Infrastructure. To understand the economy, we need to recognize the importance of the informal sector and those without access to banking services. We must also consider currency fluctuations and the political climate per country.
  • Gender Gap. There continues to be a significant funding gap between male and female founders. This is especially true when they build outside popular industries and within smaller markets. In 2022, 13% of equity funding went toward female-founded startups compared to 87% that went to male-founded startups (Partech).

Advantages: Problem-Solving & Resourceful

  • Strong Business Fundamentals. Entrepreneurs have adapted to the scarce funding environment by building models with positive unit economics. Businesses prioritize strong fundamentals over expensive, loss-making acquisition strategies.
  • Demand Driven. One of the key drivers of startup growth is demand. Unlike in some more mature markets, where solutions are created for problems that may not even exist, these startups tend to focus on meeting existing needs.
  • Impact. Africa provides plenty of opportunity for investors who want to make a positive impact with their capital. The healthcare sector, fintech and renewable energy are the top areas for impact investment across the continent.

The ‘Big 4’ and Beyond

The ‘Big 4’ refers to the continent's four major investment markets: Nigeria, South Africa, Egypt, and Kenya. In 2022, these four countries amassed 72% of venture capital funding by volume, accounting for $3.5 billion and 531 deals. Many investors are drawn to these markets since a significant portion of the continent's startup incubators and accelerators are located in these countries due to their large populations and high GDP. However, Diego Arias García, from Plug and Play, notes up-and-coming regions like Morocco, Senegal, and Tunisia are proving that some of the best-performing companies can also grow out of smaller markets.

While many aim to spread investments outside the ‘Big 4’ expansion throughout the continent is anything but easy. Navigating regulatory frameworks, language barriers, and currency differences can be equivalent to starting an entirely new business (The State of Africa 2023).

Top Investment Destinations by VC Funding, 2022

  1. Nigeria: $1.2B
  2. South Africa: $830M
  3. Egypt: $787M
  4. Kenya: $758M

Top 5 Companies, 2023 (Y-Combinator)

  1. Flutterwave
  2. Wave
  3. Instabug
  4. Breadfast
  5. Reliance Health

Where to Start (for Investors)

Fintech has remained the most funded vertical with a total of $1.9B invested this past year. Nigeria takes the spot for the largest market in total equity funding and equity deals in 2021 and 2022. That being said looking at companies that are digitizing the fundamental sectors of the economy is a good start. Plug and Play, for example, have focused on healthcare, fintech, B2B SaaS, and logistics. However, education is another key vertical Investor, Diego Arias García is looking at. Despite the concentrated capital flow, the continent as a whole brought in 1,149 unique investors in 2022.

Tamim El Zeim, Partner at Seedstars Africa, warns that inexperienced investors who analyze opportunities in Africa based solely on their knowledge from their home country pose a significant risk. He states that successful copycats have had to adapt to the unique characteristics of African markets, and failing to understand these subtleties can be risky for foreign investors. Additionally, he encourages the diversification of the portfolio across several countries. Internationalizing companies early helps mitigate that risk by being exposed to several currencies early on.

Top Sectors by Deal Count, 2022

  1. Fintech: 31% - 217
  2. E/M/S Commerce: 18% - 126
  3. Enterprise: 15% - 102
  4. HealthTech: 8% - 53

Top Sectors by VC Funding, 2022

  1. Fintech: $1.9B
  2. CleanTech: $863M
  3. E/M/S Commerce: $638M
  4. Enterprise: $549M

Local & Global VC Funds Investing in Africa

Seedstars Africa

We are an early-stage venture capital fund investing in high-growth companies active across Sub-Saharan Africa. Seedstars Africa Ventures provides entrepreneurs access to pan-African and international support.

Ajim Capital

Ajim Capital is an early-stage fund that provides startups in Africa financing from Pre-seed to Seed. We support founders from the earliest days with hands-on strategic advice and access to our global network of investors and experts.


Partech is one of the most active tech investors in the world, bringing together capital, operational experience, and strategic support for entrepreneurs at seed, venture, and growth stages.

Five35 Ventures

With a decade-long track record of venture building alongside some of the smartest female-led founding teams in Africa, we back female-focused startups across multiple sectors that tackle the most meaningful challenges across the continent.

Launch Africa Ventures

Launch Africa is a leading Pan-African VC fund solving the significant funding gap in the Seed and pre-Series A investment landscape in Africa. We back startups across multiple sectors, regions, and products that tackle the most meaningful challenges on the continent.


We provide growth capital and deep strategic value to founders in Africa while positioning them for international expansion and impact. We believe every investment is a partnership and value-creation goes far beyond just capital.

Plug and Play

Plug and Play, Africa Ventures is open to pre-seed to Series A deals. Investing across multiple verticals including fintech, healthcare, education, and future of work within a range of markets: Egypt, Morocco, Kenya, Nigeria, Cameroun, etc.

Silicon Badia

Since our establishment in 2012, our firm has invested in over 100 tech startups globally worth over $30BN cumulatively and spanning over 15 different industries within tech.

Additional Readings

Interested in learning more about Africa's growing startup ecosystem? Check out these additional readings!