Should Africa be Normalizing 8-figure Rounds Now?

Should Africa be Normalizing 8-figure Rounds Now?

See Finisha word commonly used by speakers of Nigerian Pidgin, to represent a situation where respect has lost due to prolonged proximity.

TymeBank, Chipper Cash, Flutterwave, Wave, Opay, Andela, Jumo, MNT-Halan and TradeDepot all secured over $100m in a single funding round last year. These startups covered over 40% of the total sum raised in 2021.

2021 was the best year ever for African tech startup funding. More startups raised more money from more investors than in any previous year. Raising over $4m in 2021 was a big deal, one that Africans hope the space surpasses in 2022.

Although these funding are signs of great maturity in Africa’s tech space, such large raises have been rare. Prior to 2021, only 2 African startups had raised $100m or over: Andela and OPay in 2019.

While we can give a thumbs up to the region’s raises, there are still areas unattended to. These loopholes have ensured the continuous 6 or 7-figure rounds in Africa. A recent report by Endeavor claimed that most deals sealed in the last two years have been between $0.2 million to $5 million range.

Range of rounds in Africa

Source: Endeavor

According to Tosin Faniro-Dada, CEO and Managing Director of Endeavor Nigeria, said that although investment levels are increasing, it should be made easier.

“The data gathered in this report is clear – Africa is the next digital growth frontier. The combination of our young and digitally savvy population, an emerging technology ecosystem, and the impact of the COVID19 pandemic on behaviours is set to trigger an inflection point in our digitization journey.

“We have been excited by the increased levels of funding that our entrepreneurs are attracting but we want to make it even easier for more investors to bring out their cheque books to catalyse the growth that we believe is pending,” said Tosin.

So what exactly should constitute the reason for low-level investment in Africa. Low levels of technology infrastructure, tight consumer spending, or is it the uncertainty that disturbances like conflicts and political turmoil generate? Pick the poison.

Whatever the case is, Africa’s raise needs to level up. It has its hand in every piece of the pie now, it just needs to keep digging deep. 8-figure rounds will serve as an appropriate digging tool. The $0.2 million to $5 million raises have been prolonged in the scene, they have become cases of ‘see finish’.