Into the crypto economy

Africa’s Crypto Uptake Ushers Blockchain Startups Into VC Territory

By  |  June 1, 2022

Though crypto is largely not legalized in Africa, its adoption has been going through the roof, even as blockchain becomes a valuable building block for the continent’s next generation digital products. This tremendous uptake of digital currencies has drawn the attention of across-the-world investors looking to back startups emerging in the space. 

Per a recently compiled research by Swiss blockchain investor Crypto Valley Venture Capital (CV VC) and Standard Bank, African ventures in the blockchain landscape raised more funding in Q1 2022 than they did in Q1 2021. In the whole of last year, these companies raised a total of USD 127 M.

The publication, titled The African Blockchain Report, shows that at the end of Q1 2022, USD 91 M was secured, representing a whopping 1,668 percent year-on-year increase in cumulative cash flow from the same period last year. 

2021’s performance grew only by 149 percent against that of the previous year [2020], bringing about a growth of more than 11 times for 2022. At this point, funding for African crypto ventures is at an all-time high and there is much reason to believe that the first quarter’s performance will be outdone by the following quarters.  

Last year, funding for blockchain startups globally reached a USD 25.2 B mark, with 1,247 deals. With USD 127 M, Africa accounted for just 0.5 percent of the entire funding that went into the sector. Perhaps, with more builders and users in the space, this year might bring about a much-chased change. 

While Africa’s funding charts go bunkers [having conveniently crossed the USD 2 B mark despite a global slowdown in tech startup venture funding] it is interesting to see crypto firms tap into the momentum. Feeding off the fintech push, blockchain is looking to capitalize on the lack of legacy financial infrastructure to serve the millions of people who own or plan to own digital assets. 

For this reason [the convergence of potent factors] the African Blockchain Report predicts that a unicorn will emerge from Africa’s cryptosphere in the next few years and expects the region to [in the next five years] lead when it comes to the capitalization of business with blockchain. 

According to the publication, Nigeria, Kenya, Seychelles absorbed 96 percent of the USD 127 M that was invested in African blockchain startups. 

Admittedly, funding into African crypto startups for 2022 got off to a quick start, thanks in part to the advent of Web 3.0 (or simply Web3). After raising a USD 7.5 M seed round in February Congo-based Web3 acquisition portal and super app in May closed a USD 30 M Series A round led by Paradigm. 

MARA, a startup providing a simple portal to the continent’s crypto economy, banked USD 23 M recently to launch its operations in Kenya and Nigeria. Around the same time, Similarly, Seychelles-based cryptocurrency exchange KuCoin nabbed USD 50 M in pre-Series B at a valuation of USD 10 B. 

In March, South African crypto exchange VALR raised a USD 50 M Series B round which left the startup’s valuation at USD 240 M. The company secured a Series A round of USD 3.4 M back  in July 2020. 

Per the World Economic Forum, African crypto ownership grew 1,2000 percent in the year which ended June 2021, amounting to a USD 106 B market. Last month, the outlier economy of the Central African Republic controversially became the second country in the world to adopt BTC as a legal tender and is equally now mooting the establishment of a model crypto hub, Sango. 

With these piecemeal yet notable developments, the African crypto economy is at the cusp of its takeoff territory. 

Featured Image: Parentzone

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