Financial technology (FinTech) start-ups with headquarters in Nigeria accounted for more than 50 per cent of the total investments attracted by Nigerian start-ups 2020.
About 37 of them raised $89.34 million from venture investors despite the prevailing economic conditions globally, a report by Disrupt Africa stated.
The report entitled, “ African Tech Start-up Funding Report 2020’ said that the investment in fintech business in 2020 more than doubled the funds they raised in the previous year as 11 of them attracted $37.65million from investors in 2019.
As such, analysts at Disrupt Africa described the fintech sector as “the favoured sector for investors in Nigeria.”
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It said, “The percentage of funded start-ups that were fintech, as well as the share of Nigeria’s funding contributed by fintechs almost doubled. Meanwhile the total cash amount raised by the country’s fintechs more than doubled.
“Thirty-seven (37) fintech start-ups (43.5 per cent of Nigeria’s funded ventures) raised US$89,342,000 (59.4 per cent of the country’s total investment). Compare this to the previous year, when 11 fintech start-ups (22.9 per cent of Nigeria’s funded companies) raised $37,645,000 (22.9 per cent of funds).”
The above list of stand-out rounds accounts for $70 million of the US$89.3 million total secured by Nigerian fintech ventures, which means the remaining $19.3 million was shared among 33 companies.
According to the analysts, e-health was the second sector in Nigeria with substantiallyamount of investment behind fintech – with 10.6 per cent of funded start-ups (nine), and 20.7 per cent of funding (US$31,068,000).
They said e-commerce and logistics saw eight and five start-ups funded respectively.
In terms of funds secured, e-commerce bagged US$10,710,000 (7.1 per cent of the total), and energy US$7.2 million (4.8 per cent).
The report stated, “There is a prevalence of accelerators and early-stage venture funds covering the smaller ticket sizes in Nigeria – the likes of Y Combinator, Ventures Platform, Microtraction, Acuity Ventures, Ingressive Capital, Kepple Africa Ventures and Sherpa Ventures.
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“Later-stage funds such as TLcom Capital, 4dx Ventures, Partech and Lateral Capital are also active in the country, while there is some institutional and corporate interest with IFC and ARM among this year’s investors.”
Disrupt Africa noted that funding had always been available in Nigeria market at all levels of the start-up lifecycle, driven in particular by a well-developed local investor scene.
“This continues to be true, with the likes of above-mentioned local organisations Ventures Platform and Microtraction consistently active, while 2020 also saw successful local entrepreneur Iyinoluwa Aboyeji (Andela, Flutterwave) launch the Future Africa fund committing to back up to 20 start-ups a year,” the report stated.
“International entities are also more than willing to back Nigerian ventures, and the country is likely to attract ever-increasing attention after hosting the continent’s landmark moment of the year – namely, Nigerian fintech Paystack’s acquisition by Stripe in a deal reported to be worth $200 million.”
“As Nigeria puts forward more of these global startup successes, combined with the active local entrepreneurial and investor community it has, the country will continue to dominate the pages of this report for many years to come,” Disrupt Africa said.
