The global inequity in venture financing is staggering

The global venture capital ecosystem is inequitable. In the United States’ mature venture capital market, an entrepreneur’s race, gender and age help determine who has access to capital.

But there are other limiting factors: geography, for example. While it has been encouraging in recent years to cover what has felt like a boom in Latin American and European fintechs, or a general rise in VC activity in a host of Asian countries, the landscape remains imbalanced.

The pragmatist in you is already forming complaints. Yes, the world is not uniformly developed. Yes, venture capital startup hubs can take decades to reach maturity. And, yes, progress is being made in some regions.


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But as the world grows more connected, the tech gap between nations isn’t narrowing fast enough. And yet, given rising populations of people ready to jump into a more digital future, investment in some less-mature startup markets is lower than you’d think. (Less investment into less-mature startup markets is not a tautology; you can get to ecosystem maturity faster with easier capital access because it allows for quicker startup formation cycles.)

The wild imbalance of the world’s venture capital came up yesterday over on the public forum. Dauda Barry, CEO of U.K.-based startup Adaplay Esports, tweeted that African startups had “already raised $500 [million] in 2021,” which he contrasted positively to what he described as a full-year 2020 result of $1.4 billion.

Using his figures, African startups are on pace to raise $2.5 billion in 2021 if current trends hold, a healthy increase from the 2020 figure. Clayton Collins, a media exec, pointed out an interesting contrast: Stripe raised more yesterday than Barry had reported for the entire African continent this year.

Put another way: A single U.S.-Irish company outraised an entire continent’s year-to-date venture capital sum in one day.

Taking numbers from Twitter is never the best way to be informed, however. So this morning, let’s do a little digging. I’ve pulled Crunchbase and PitchBook data to peek at what they say about African startup investment thus far in 2021. And we also have our prior look into the 2020 African startup ecosystem to point to. (For more on African startups in general, we also chatted with the CEO of public African e-commerce player Jumia here.)

Ready to get into some startup numbers after weeks of nonstop IPO coverage? I am. Let’s go!

The African startup market

Barry’s number of $500 million felt directional when we were discussing it, as all round numbers are. So let’s poke at it a bit.

PitchBook data of African investments thus far in 2021 includes 72 deals worth $750.6 million, though if we drill down to just companies with African headquarters, the number dips. Crunchbase lists $746.1 million in total equity funding for African companies so far in 2021, but if we filter out private equity along with all nonequity investments, the number falls to around $136.2 million.

There are a number of Africa-tracking groups that put out regular reports, including Disrupt-Africa and Partech Partners, which has a good 2020 report as well. But luckily for us, Africa-focused Briter Intelligence has a venture capital database of its own. Its 2021 numbers include 67 African rounds worth more than $500 million, a figure that doesn’t include the value of investments of undisclosed size.

Turning back to Briter’s 2020 report, investment in the continent during Q4 2020 appears to be at or around the $500 million pace, though we’re eyeballing a chart for that figure.

The sum of the above is that, sure, a $500 million figure for African venture capital thus far in 2021 could be correct, though there is a discrepancy in how different groups count the continent’s venture capital results. Regardless, with directional comfort with the half-billion figure, we can easily see that the Stripe-Africa contrast holds up.

That’s crazy.

To be clear, this is not a swipe at Stripe. There are reasons to be slightly rude to Stripe, like its unwillingness to move out of the private markets and trade publicly. But the fact that it can attract capital at a nearly $100 billion valuation is nothing to be irked about. The company’s recent raise is merely indicative of the fact that, for companies in some locales, there is no limit to the cash that they can access, while in other parts of the world, there’s the opposite problem.

We could discuss the moral issues at play here. But, because that wouldn’t change any minds and would annoy most of my audience, let’s take a different tack: I am surprised that more VCs aren’t investing in Africa. It smells like investing arbitrage. The pandemic has ripped the Band-Aid off investing via Zoom, making Africa precisely as close to your home office as Europe, North America, Latin America or anywhere else. There could even be less deal competition! And there have been African tech IPOs and nine-figure African tech exits in the last few years, so there are paths to venture-scale liquidity.

Arbitrage aside, it has been heartening to watch African startups raise more capital in recent years. If they can just raise around 6x their 2020 haul of $1.4 billion (per Partech Africa) this year, they’ll just about match what the U.K. alone managed thus far in Q1.


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