Fintechs in Africa continues to outperform all other startups in funding received - TechCrunch
In the year 2021 more and more contracts were closed in Africa, as start-up technologies took off across the continent nearly $ 5 billion. This amount was double the previous year's investment, and nine times from what was built five years ago, an indication of how much the initial outlook has changed over the last few years.
Fintechs took control of fundraising, making up nearly $ 3 billion, or two-thirds of the total investment achieved by startup levels across the continent last year, which report with Briter Bridges company view markets showing. This amount was also more than double $ 1.35 billion investment raised by fintechs in Africa in 2020, and triple in 2019.
Among the biggest gains of the fintech capital were Opay, which raised $ 400 million in Series C funding, Flutterwave, which raised $ 170 million in Series C rounds, and TymeBank, which raised $ 180 million in Series C. B. Jumo and MNT Halan $ 120 million rounds, as a digital payments gateway MFS Africa won $ 100 million. This was how Zepz (formerly WorldRemit) raised $ 292 million in Series E funding, and Chipper Cash raised $ 250 million , Tala $ 145 million as Wave sealed $ 200 million in funding.
And, with the gradual funding for fintechs in Africa over the years, it is likely that capital raised to these start-up levels will increase by deepening mobile phone usage and into the internet.
Mobile membership across the continent is set to rise by four percentage points to hit 615 million - half the population of the continent - by 2025 according to the GSM Association. It is also poised to grow as the uptake of lending, digital payments, banking and insurance services grows.
Financial Technology Partners, an investment banking firm with a particular focus on fintech, in a previous study of the sector in Africa said that the continent, with its rapidly growing population, some of the fastest growing economies and undeveloped financial services ecosystem, offers fintechs an attractive opportunity .
“As the payment space begins to see scale sizes such as Flutterwave, Chipper, MFS Africa, Cellulant, Jumo playing alongside established global providers such as Visa, Mastercard, and Stripe, it is likely that the next few years (of course, we already do) will see more trends across other fintech onions, from lending to KYC, SME management software, and decentralized finance. This, and increased M&A activity, is how the ecosystem will move towards maturity and consolidation, ”Briter Bridges Director Dario Giuliani told TechCrunch.
Startups specializing in digital / mobile payments have gained the most finance over the years followed by banking / loan startups and insurtechs.
The latest data shows that the role of digital payments in Africa has also seen the largest growth in funding received and overall business volume over the last ten years compared to other subdivisions within the fintech space. The growth of fintechs goes against the backdrop of growing phone ownership and deeper penetration into mobile money technology and the internet - all of which have made it possible to overcome the sometimes limited traditional banking infrastructure.
Innovation around mobile money and digital payments has allowed online and offline payment processing via USSD or STK orders, over apps or using NFC technology.
“Africa has a large under-bank and non-bank population, but the growing, increasingly mobile middle class and evolving communications infrastructure make it extremely conducive to innovation. fintech and mobile financial services, ”said Financial Technology Partners.
Emerging fintech services have banned unbanked people, building financial inclusion while accepting them solves some of the biggest pain points that businesses and people face. individual - such as sending and receiving money, and accepting payments. Startups in the paypoint such as Wari, sureRemit and Paga, for example, have made it possible for African residents to earn money from abroad easily and at an affordable price.
Opportunities for growth
Africa is ranked as the second fastest paying and profitable in the world and banking market after Latin America, according to seo McKinsey's study, and this simply means that the fintech sector is likely to continue to attract investors tapping into the ever - growing growth opportunities.
The continent is already a global leader in mobile currency adoption, accounting for the majority of mobile currency transactions made in 2020 - a year that saw the number of accounts mobile money rising 43%. The success of mobile money across the continent seems to be due to easy access with telecommunication technologies.
For example, M-Pesa, East Africa's largest telco mobile money service, Safaricom, does not require an internet connection for customers to send and receive cash, as well as pay utility bills - the wallet converts subscribers' phone numbers to its proxy for bank accounts. The service recently overturned a voice to become Safaricom's prime mover after the platform's revenue hit $ 745 million for the financial year ended March 2021.
Across the region (especially in Kenya) M-Pesa has been the anchor for a number of new services coming online. In 2012, for example, Safaricom laid the groundwork for the adoption of loan apps when it first launched M-Shwari - a mobile-based savings and lending product. Many more lending apps have appeared on the market since then including Silicon Valley-backed Tala and Branch. The popular now lterminating apps use customers 'mobile money trading history to determine the amount of instant credit extended to lenders - money that is then invested in customers' mobile money wallets.
The introduction of lending and banking has thus made credit accessible to the majority of people who did not have credit scores, and who were previously cut off by formal financial institutions due to the lack of banking history data.
Insurtechs has also been successful over the past few years in delivering innovative products that are affordable, allow micropayments, and cover ever-increasing risks including those which are driven by climate change. Innovative results around insurtech have also encouraged the take-up of insurance products - even though inflows across sub-Saharan Africa (excluding South Africa) are still relatively low to other departments.
Although investments grew in 2021, most of the funding went to a small number of startups. A study by Briter, which includes data from all published and unpublished contracts, shows that about $ 3 billion of the total amount raised went to 20 companies, with no raised over 700 other startups nearly $ 2 billion.