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African Startups Raise Over $1bn in Past Two Months

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2022 has started off really promising for African startups with over $1bn raised in the first two months. This figure is more than half the cumulative funds raised in 2021.

Although 2021 was also a revolutionary year for many startups, this year is seeming quite promising. In 2021, the African tech space became three times larger than its previous value – scoring a record-breaking 2021 with total funding summing up to $2 billion.

Report by Disrupt Africa reveals that 564 African startups raised a combined $2,148,517,500 in 2021 – a record already nearing being defeated in 2022. In January, 44 startups are said to have raised more than $400m in funding while over $500 million was raised by 47 African startups in February. Summing up that figure with the total number of undisclosed funding raised by 19 startups in the past two months, the continent’s record in 2021 seems to be on its way to being broken early.

The report by Disrupt Africa reveals that the 110 startups have raised an estimated $1,123,556,000 between January and February 2022. The heavy numbers are linked to countries like Nigeria, Kenya, and South Africa. With Nigeria leading with 33 startups raising a combined $364,598,000 (32.5 per cent of the total) followed by twenty Kenyan startups that have raised $223,450,000 (19.9 per cent of the total), and 16 South African startups having secured $219,930,000 (19.6 per cent of the total).

Egypt is also responsible for a reasonable amount of investment. Although 2022 is seeming to be relatively slow for the North African country, 21 startups from Egypt has raised a total of $102,220,000 (9.1 per cent of the total) this year so far.

According to the data, fintech remains the main driver for investment in the continent with 34 of the 110 companies being fintech startups – raising a total of $434,296,000 in 2022 so far (38.7 per cent of the overall tally).

Projections with ongoing Russia-Ukraine Crisis

Although all seems to be going fine in the African tech space, the effects of the Russia-Ukraine conflict has affected major activities in the venture capital market globally. Since the Russian invasion last Thursday, 24th February, it’s been reported that funding announcements have reduced drastically.

Investors King recalls that following last Thursday’s attack, only 154 companies globally announced seed (early or late-stage) funding from the venture capital market or Angel Investors. Of the 154 startup companies, only 8 are from Africa.

This indicates that the ongoing crisis may be a threat to the growth projection of not only African startups but the global startup and venture capital market.

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Ride-Hailing Company Didi Resumes Registration of New Users After Ban is Lifted From App

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China’s ride-hailing giant Didi has resumed the registration of new users on its app, eight months after it was suspended by Chinese authorities.

Didi often referred to as “China’s Uber”, has for some time been awaiting approval to resume onboarding users on its platform, as a key step to return to normal business since the app was banned.

Having carefully cooperated with the Chinese cybersecurity review, the authorities have lifted the ban by granting them the go-ahead to resume new user registrations and downloads of its apps in China as soon as this week.

The latest move comes as Chinese policymakers are seeking to restore private sector confidence and counting on the
technology industry to help spur economic activity that has been ravaged by the COVID-19 pandemic.

The company said via a statement, “Our company has carefully cooperated with the country’s cybersecurity review, seriously dealt with the security problems found in the review, and carried out comprehensive certification for more than one year.

“Didi would also take effective measures to ensure platform safety and data security, and as well safeguard national cyberspace security”.

Investors King understands that trouble started for Didi in July 2021, when Chinese authorities ordered the country’s app store to remove Didi’s app, citing reasons that the platform was illegally collecting users’ data.

25 of its mobile apps were taken down, registration of new members was suspended, and it was slammed with a fine of &1.2 billion over data security.

The ban on Didi occurred less than a week after it went public on the New York stock exchange, in the biggest U.S. share offering by a Chinese company since Alibaba debuted in 2014.

Founded in 2012, Didi is China’s dominant ride-hailing service with 550 million annual active users globally. In the first quarter (Q1) of 2021, the app had 156 million monthly users, well above Uber’s 98 million in the same period.

The company handled 25 million rides a day in China, during the same period while Uber did 16 million.

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Indian Startup Sharecut Deactivates Accounts of Over 400 Employees Due to Macro Economic Factors

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Indian social media startup Sharecut has deactivated the accounts of over 400 of its employees, which is about 20% of its workforce, as it seeks to navigate the global economic downturn.

The startup which has already informed affected employees about the deactivation of accounts, through its CEO Ankush Sachdeva, disclosed that such a drastic decision was taken to ensure the financial health and longevity of the startup.

In his words, “We are taking a very different decision today to part ways with around 20% of our talented full-time employees to ensure the financial health and longevity of our company in the current uncertain macroeconomic environment.

“In hindsight, we overestimated the market growth in the highs of 2021 and underestimated the duration and intensity of the global liquidity squeeze”.

Speaking on the deactivation of laid-off employees’ accounts, the CEO disclosed that revoking employees’ access was not an ideal experience, although, after much deliberation, he disclosed that that was the only practical solution.

For the affected employees, they will receive the total salary for their notice period and two weeks’ pay as ex gratia for every year they served the startup. The employees will also get  100% of the variable pay until December 2023, and their health insurance policy coverage will remain until the end of June.

Also, for employees who have to leave the startup as part of the job cuts, their Esops that vest on April 30, 2023, will be retained by those staffers.

Investors King understands that a month ago, sharecut laid off 5% of its employees after it shut down its fantasy sports platform Jeet 11 after disclosing that the platform never gained any meaningful traction among its users.

Sharecut since its operation had raised a total of $1.7 billion in funding over 15 rounds and is reportedly funded by 26 investors with tech giant Google as one of the lead investors.

The start-up has a total workforce of around 2,300 employees, but the recent layoffs at the company will no doubt result in a decline in the number of employees.

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Startups in Four African Countries Account For 75 Percent of Funding Raised in 2022

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Recent reports reveal that startups in four African countries, Nigeria, Kenya, Egypt, and South Africa, accounted for 75 percent of the total fund raised in 2022 in Africa.

Startups in Nigeria accounted for ($1.2bn), Kenya ($1.1 bn), Egypt ($820m), and South Africa accounted for ($550m) adding to the total sum of $4.85bn that was raised in 2022.

Analysis from database and Insights predict that Africa could exceed $5bn in funds raised, noting that the fund raised in 2022 saw an 11 percent year-on-year increase from 2021.

Meanwhile, these four African countries (Kenya, Nigeria, Egypt, and South Africa), have been reported to dominate Africa’s funding startup scene.

The vast majority of venture capital in Africa is often scooped by these four countries fondly referred to as “Africa’s big four”.

In a 2021 report by African Development Bank (AFDB), it disclosed that these four countries accounted for about a third of the continent’s startup accelerators and incubators, and also received 80% of foreign direct investment (FDI) into the African region.

Also, a disrupt Africa report revealed that start-ups in the “big four” raised a combined $1.9 billion in 2021, about 92.1% of the overall total investments raised in Africa for that year.

Their funding has continued to increase significantly over the years from 79.4% in 2018 to 87.5% in 2019, to 89.2% in 2020.

These four countries have been reported as favorites amongst investors, due to the fact that they innovate faster than other African countries when it comes to startup investment and funding in large part as a result of their large economies and sizeable populations.

On the other hand, Africa’s startup funding in 2022 was dominated by fintechs, accounting for 37 percent of deals.

This doesn’t come as a surprise that for so long, Fintech startups have continued to dominate Africa’s funding scene.

In the year 2021, fintechs dominated the fundraising scene, accounting for nearly $3 billion, or two-thirds of all the investment realized by startups across the continent.

Reports reveal that the amount was also more than double the $1.35 billion investment that fintechs in Africa raised in 2020, and triple the amount in 2019.

Given the deepening of mobile phone usage and internet penetration in Africa, it has been predicted that funding for fintechs will increase year-over-year.

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