Investors update: January 24 2023 - Debt rounds fuel funding growth in Africa’s tech ecosystem

Debt rounds fuel funding growth in Africa’s tech ecosystem

Highlights

• African startups more than doubled the amount of debt they raised last year, a surge that may continue as an economic slowdown makes equity funding more expensive and unsustainable over the long term.
• Companies on the continent raised $1.55 billion in 71 debt deals in 2022, suggesting it’s become a solid alternative source of capital for African technology startups, Partech Partners said in a report.
• Total funding invested into tech startups on the continent reached $6.5 billion, an increase of 8% vs 2021, spread across 764 deals – compared to 724 rounds in 2021.

Source: Partech Partners

Our Takeaway

Last year was a particularly challenging one for the global venture ecosystem, as investors scaled back their investments. But many reports have shown that the African tech ecosystem showed great resilience, as more investors have doubled their commitment to the continent. Overall, Nigeria, South Africa, Egypt, and Kenya remain the top investment destinations, with a 72% share of total volume, while fintech remains the most funded sector across capital sources—39% of equity volume ($1.9 billion) and 45% of debt deals ($691 million).

---

Nigeria’s AFEX expands commodities exchange to Uganda

Highlights

• After expanding its commodities exchange business in Kenya in June last year, Nigeria’s AFEX is now entering Uganda hoping to replicate its successes so far.
• AFEX was established in 2014 as Nigeria’s first licensed private commodities exchange, combining technology and infrastructure to improve the country’s food systems and local markets.
• In its first year of operations in Uganda, the firm aims to reach 10,000 farmers and aggregate 15,000 metric tons of commodities, while extending its aggregation, storage, and financial services to Ugandan farmers and processors.

Source: ABC

Our Takeaway

Uganda, often referred to as Africa’s ‘bread basket’, has one of the most dynamic commodities markets in Africa with a significant potential for growth, and a positive government interest in commercializing agriculture through collaboration with private sector players. But the East African nation lacks the necessary infrastructure in storage, credit, and access to markets to sustain food production, presenting a market opportunity that AFEX seeks to capitalize on with its latest expansion. 

---

Moroccan logistics startup Cathedis closes pre-Series A round

Highlights

• Morocco-based logistics startup Cathedis has raised $735,500 comprising pre-Series A funding from Afrimobility and a bridge round from CDG Invest.
• This is the second round the startup has raised since its founding in 2019 after getting the backing of CDG Invest’s 212 Founders program back in 2020.
• Founded by Imad Mansour Zekri, Cathedis’ platform offers cloud-based warehousing and delivery solutions to local e-commerce stores.

Source: Wamda

Our Takeaway

Transport touches on almost every sector of the African economy and is crucial to its development. Within the industry, the trucking and logistics market accounts for almost 80% of transported goods but players in this space often grapple with challenges caused by fragmentation and lack of transparency. With digitization, venture-backed startups such as Cathedis solve this problem while tapping into the lucrative industry.