🛠️ 2023 🛠️ Fintech, Energy, and the rest 🛠️

Combined, Fintech & Energy represented 69% of all funding raised in Africa last year

Previously on Africa: The Big Deal: We held a very well-attended LinkedIn Live on Wednesday last week, and took this as an opportunity to recap all the resources we have been sharing on start-up funding in Africa in 2023 so far:

Everything You Wanted to Know About 2️⃣0️⃣2️⃣3️⃣ (and weren't shy to ask!)

Anyone asked to guess which sector attracted the most funding in Africa in 2023 would probably go for Fintech. And they would be right. That said, in absolute terms, the sector experienced another serious drop last year: from $2.4b of funding raised in 2021 it had fallen to $1.8b in 2022, and now $1.2b in 2023. But given the generalised slowdown, its relative share of overall funding actually increased a little to 41% (after losing 15 percentage points between 2021 and 2022). In terms of number of ventures having raised $100k or more in 2023, fintech represents 24% of the total (-4pp YoY, the biggest relative drop of all sectors). But there is life beyond fintech of course…

… in particular in the Energy space, which ranked #2 in terms of funding raised in 2023, as it’s done consistently since we started tracking data in 2019. The sector grew from $670m raised in 2022 to $800m+ in 2023, and attracted 28% of all funding last year, almost double its share in 2022 (14%). It is the sector that experienced the strongest growth between 2022 and 2023, both in terms of absolute amount raised, and share of total amount raised. If we look at the number of ventures which raised a $100k+ deal last year though, Energy only ranks in 7th place (7%), highlighting the role that a few organisations - starting with M-Kopa and Sun King, with nearly half a billion raised between the two of them - played in the sector’s overall performance.

Completing the top 3 is Logistics & Transport which has been holding this spot since 2019 (except in 2020 when it ranked 4th). It is quite far from the two largest sectors though, with $210m raised last year, i.e. 7% of the total (down from 12.5% in 2022). Its share of number of ventures is higher (12%), and has grown slightly YoY.

Healthcare and Agri & Food make up the rest of the top 5. Healthcare more than doubled its share of total funding between 2022 and 2023 (from 3% to 6.5%) and the number of ventures raising funding also grew a bit. For Agri & Food, the progression in terms of amount raised was much more moderate (from 5.1% to 6.3%), yet as far as the number of ventures raising was concerned, it recorded the biggest progression (from 9% to 14%), placing second in 2023.

Retail and Telecom, Media & Entertainment, which had placed #4 and #5 respectively in terms of funding in 2022 suffered strong setbacks in 2023 when the amount of funding raised was divided by 4.5 and 4.8 respectively. Finally Education & Jobs - in the absence of a large Andela deal like in 2019 or 2021 - continued to attract less than 2% of the total invested on the continent.

Finally, if we look at all ventures with a ‘Climate Tech’ angle - which more than a sector cuts across multiple vertical and business models -, they raised a combined $1 billion in 2023, which illustrates both the potential of ‘green’ investments in Africa, and the increased focus of investors in this space.

If you’re interest in learning more about climate- or environment-related investments on the continent, our friends at Catalyst Fund have recently published a very interesting analysis, using our data. You can have a look at their report here, but we might ask them to come guest blog soon to summarise their key findings if that’s of interest ;)