Blockchain investment in Africa rose in 2022. Several funding methods were initiated in supporting blockchain firms in solving problems in the continent. According to CV VC, among the funding processes used, Venture Round (Series A – C rounds) was responsible for most of the funds raised in the continent. Other funding methods accounted for about 10%.
Here is a list of how each of the funding rounds was carried out:
In 2022, Venture Rounds accounted for over 90% of the capital raised by African blockchain businesses. This was done in 12 different deals and accrued $426 million in total. Venture Rounds had a lower take in 2021 at 42.8% and $38.3 million from 6 deals.
Venture rounds are investment rounds in which a company raises capital from external investors in exchange for equity in the company. They are usually led by venture capitalists, angel investors, or other institutional investors.
There are several types of venture rounds, such as seed rounds, Series A, B, C, and beyond, which involve a higher valuation and more significant investment than the previous round. These rounds reflect the company’s growth and potential for future success.
After Venture Round was Seed Round which got 9.4% from 13 deals and $44.4 million within the same year. Although, Seed Round funding was at 53.3% from 14 deals, and valued $49.5 million in 2021.
Seed funding is an early-stage investment round in which a startup company raises initial capital to fund the development of a new product or service. Investors in seed rounds are often angel investors, family, and friends, or seed-stage venture capital firms.
The valuation of the company at this stage is usually low, reflecting the high level of risk involved in investing in a new venture. Seed funding is important for startups because it provides them with the necessary capital to get off the ground and attract further investment down the line.
The next highest funding round was Pre-Seed Round. It was used to raise 0.3% of all funds from 3 deals valued at $1.48 million. However, in terms of percentage, number of deals, and worth, it was higher in 2021 at 1.8%, 5, and $1.6 million respectively.
A pre-seed round is an early-stage investment round in which a startup raises initial capital to develop a business idea or concept. It typically involves raising smaller amounts of capital than seed rounds, and the valuation of the company at this stage is usually low.
Pre-seed funding is important for startups because it provides them with the necessary capital to take the first steps in building their business, and can help them validate their idea and gain traction in the market. Seed rounds involve raising larger amounts of capital to support the growth and scaling of the business.
Equity Crowd Funding
Equity crowdfunding is the second to last method used to raise funds in 2022. It is only above the Accelerator process of funding. Out of all funds raised, Equity crowdfunding was used to raise 0.3% from 1 deal valued at $1.4 million. In 2021, the entire figure was zero – no fund was raised via this means.
Equity crowdfunding is a type of fundraising in which a company raises capital by selling equity or ownership stakes to a large number of individual investors, typically through an online platform. It can be an attractive option for startups and small businesses because it provides access to a broader pool of potential investors and allows companies to build a community of supporters who can provide valuable feedback and support.
Investors typically receive equity or ownership stakes in the company in exchange for their investment, but investors should carefully evaluate the opportunity and the company before investing.
In 2022, no fund was raised via Accelerators. However, the opposite was seen in 2021 where it was used to raise 0.1% of all funds from 1 deal at $125,000.
Accelerator funding is the financial support provided to startups by accelerator programs, which provide mentorship, resources, and networking opportunities to help them grow and scale their businesses. The goal of accelerator funding is to help startups accelerate their growth and achieve key milestones such as product development, customer acquisition, and revenue generation.
This funding is often provided in exchange for equity in the company. Accelerator funding is often seen as a valuable source of support for startups, particularly those in industries such as technology, where rapid growth and scalability are key drivers of success.