The law of series
Exploring the characteristics of key deal types in Africa in 2021
VC deal nomenclature can sometimes be a bit confusing, and Africa is no exception: since 2019, we have recorded deals $10m or about labelled pre-Seed (Rabbit), Seed (Kuda), Series A (Naked), pre-Series B (TradeDepot), Series B (Solarise), pre-Series C (elmenus) and Series C (SPARK Schools). The reality is that it depends widely on location, sector, type of business model etc., but there are still some macro trends that are worth noting if we look at the data from 2021 (where the deal type was disclosed):
The later the stage of the deal…
… the bigger the median deal size. This seems quite intuitive but shouldn’t hide the fact that there are many exceptions here. And pre-Series A is the odd one out with a median deal size lower than Seed.
… the older the start-up. OK, another intuitive one. That said, it’s worth noting there are barely any differences between the age of start-ups that raised pre-Seed and Seed rounds.
… the larger the founding team. Though four’s a crowd, across the board.
… the more ‘male’ the founding team (from 71% of pre-Seed start-ups with a male founder or all-male funding team to 89% at Series B stage), and the CEO (15% female CEOs at pre-Seed, down to 6% at Series B).
… the more likely to be in a ‘Big Four’ country (up to 94% for Series B deals), and fintech (though this is only really true for Series B; the percentage of fintech deals is quite consistent between pre-Seed and Series A (1 out of 3)).
WTF… ‘Where’s The Funding?!’ is a really cool podcast by Michelle McKenzie where she focuses on Black and BIPOC entrepreneurship. She invites mostly entrepreneurs and investors, but asked me to talk about key trends in the start-up funding ecosystem in Africa, especially with a gender lens, and I happily obliged. Michelle’s a great host who certainly awakened the babbler in me 🙊. If you’re interesting in listening to our conversation (and others!), here’s the link 🎧