Africa’s bubbly tech landscape has undoubtedly just come through a memorable year. The now-in-the-rear-view-mirror year 2021 had a good deal of everything: Funding splurge, five unicorns, exciting acquisitions, regulatory policy somersaults, new industry breakouts, and even a handful of controversies (Cue: The Ndichu brothers brouhaha and that one time Sidebrief cried foul against Norebase).
What more could we possibly ask for? More of everything, perhaps? Well, it does seem plausible that the New Year will serve up more of the same.
With nearly USD 5 B raised by local startups in 2021, funding records have been shattered in African tech yet again after the slowdown that happened in the pandemic-stricken 2020.
However, there’s still plenty of room for improvement. For one, the rightly celebrated ~USD 5 B that flowed into African tech in 2021 constitutes only a tiny fraction of the USD 600 B raised by startups globally last year. In a way, it’s still crumbs, but no less impressive. And among the more obvious predictions, 2022 can be expected to close that gap even further.
Now, what other things to expect from African tech in 2022? We peered into the proverbial crystal ball and identified a few likely outcomes.
The other top hubs finally get their elusive unicorns
In the three years between 2016 and 2019, only three African tech companies managed the momentous feat of hitting a valuation of one billion dollars or more. Pan-African e-tailer, Jumia, did it first in 2016; Nigeria’s Interswitch followed suit in 2019; the Egyptian fintech, Fawry, made it a hat-trick of African tech unicorns in the same year.
Things were largely quiet on the local unicorn front in the unusual year that was 2020. But even though there were high hopes of a recovery in the following year, no one could’ve foreseen the swashbuckling performance that happened in 2021 when five startups acquired their horns within a few months of each other.
Last year, the prestigious African tech unicorn club welcomed new members in Flutterwave, OPay, Wave, Andela, and Chipper Cash. This brings the official count to eight unicorns in Africa, drawn from Nigeria, Egypt, Senegal; and a couple of them are Pan-African. That leaves a few conspicuous absentees in the form of South Africa and Kenya, both of which are yet to register a unicorn.
Together with Nigeria and Egypt, South Africa and Kenya are commonly lumped together as the ‘Big Four’ in African tech due to their superiority in terms of startup count, funding, community, and overall startup activity.
But while unicorns are being minted in Nigeria and Egypt, South Africa and Kenya have found the feat elusive. But 2022 might yet be the year both countries finally score.
A few ‘unicorn candidates’ can be identified: Kenya’s Twiga looks to be on track; the quartet of Tymebank, Takealot, JUMO, and Yoco seem close to ending the unicorn absence in South African tech; and there may yet be more unicorns from countries that have already registered like Nigeria and Egypt with Kuda, TeamApt, MNT Halan, and Vezeeta appearing to be on track for imminent unicorn status.
More acquisitions and exits
As funding floods the African tech scene, liquidity is on the rise and this is catalysing a new wave of strategic acquisition deals between local tech startups – and between local tech companies and foreign tech companies – while also leading to exits with significant windfalls.
Over the years, those kinds of deals have been few and far between on the local front but 2021 may have offered a glimpse of the kind of increased activity that is about to shake up the African tech space in terms of mergers, acquisitions, and exits in the coming months and years.
In 2021, there were quite a few such deals with Jiji acquiring Cars45; Ajua buying WayaWaya; PiggyVest taking over Savi; MFS acquiring Baxi; Treepz making a double swoop for Stabus and Ugabus; MaxAB acquiring WaystoCap; as well as other acquisition deals involving Flutterwave-Disha, Helium Health-Meddy, Payflex-Zip, Autochek-Cheki.
Also, one of the highlights of the previous year was the acquisition of Nigeria’s MainOne by Equinix for USD 320 M. It follows that acquisitions in African tech would be an interesting area to keep an eye on in 2022 with expansion, growth, and strategic linkups being top-of-mind for several cash-laden startups on the continent.
Also, as the capital influx of the previous year is expected to see a further surge in 2022 owing to the bullishness of both local and foreign funders at all stages, more exits are to be expected.
Featured Image Courtesy: Vecteezy