African Blockchain startups raised $474 million in 2022 from funding, a 429% increase from the previous year’s $90 million. The global blockchain industry witnessed several trials and triumphs over the course of the year, but African startups secured deals, funding, and overall growth.
The African Blockchain Report published by blockchain venture capital company Crypto Valley VC in association with Standard Bank highlighted that the gross amount of deals on the continent also grew by 12%, with several deals in the infrastructure, personal identification, record-keeping, and access to financial independence sectors.
“Combining the sharp increase in blockchain funding with the fact that Africa had the smallest global increase in the number of blockchain deals yet was the only region globally exhibiting increases in all deal sizes, indicates that African blockchain startups are raising larger cheques and investors are gaining confidence.”
“This is against the backdrop of the fact that Africa’s share of all global funding has risen more than any other region by a considerable margin.”
In 2022, venture capital on the continent increased by 34% to $3.14 billion, while global funding decreased by 35% to $415 billion. On the other hand, Blockchain deals were an exception, with $26.8 billion raised globally, a 4% increase, and $474 million raised in Africa across blockchain deals, a 429% increase.
This considerably outperformed growth in general venture funding (429% vs 34%), representing more than 12.5 times the level of growth year on year. Africa currently accounts for 1.8% of all worldwide blockchain funding, up from 0.3% previously. With a 52 per cent share, the custody and exchanges category received the most funding.
Nigeria ranks first among the countries on the continent with the highest number of blockchain startups funded, closely followed by South Africa, which has seen the rise of notable blockchain startups. Seychelles and Kenya make up the top four.
On the back of an eventful and gloomy spell for the blockchain industry, the continent’s blockchain players seem to have evaded the strokes of the market’s woe and have girded their loins to ensure the industry thrives, attracting funding from investors, pioneering ingenious products, and pushing the barriers rigorously.
As stated in the report, the last couple of months have seen the emergence of blockchain unicorns on the continent. For instance, Seychelles-based crypto exchange Kucoin reached this status in the third quarter of 2022, while Scroll.io, which identifies strongly as a scaling solution for Ethereum, became a unicorn in the first quarter of the year.
Africa is growing as a blockchain hub
CV VC’s Managing Director for Africa, Gideon Greaves, currently employed at a venture capital firm with attention on investment in blockchain startups, opines that blockchain funding is much higher than other forms of startup funding in the continent. Greaves also believes the region could enter other markets faster via blockchain adoption.
“We see this development as a key enabler for African enterprises, giving them rapid entry to markets by using blockchain as the catalyst to build new businesses,” Greaves noted. He also said that the African region lacks legacy infrastructure, giving blockchain startups a greater advantage. These startups can deploy innovative technologies like blockchain to fill the infrastructural gap.
CV VC’s executive indicated that the continent housed the right tools, population, and motivation for pioneering companies that can serve millions of people. It holds the potential to become the leading region in the next five years that seeks development by capitalizing on business using blockchain’.