South Africa the fourth-largest fundraiser for blockchain ventures in Africa

24th May 2022 By: Schalk Burger - Creamer Media Senior Contributing Editor

Private venture capital company Crypto Valley Venture Capital (CV VC) and financial services firm Standard Bank’s inaugural ‘African Blockchain Report’ shows that Nigeria raised $49.6-million for 18 new blockchain ventures in Africa in 2021.

The Seychelles raised $33.8-million for four companies, Kenya $20-million for one enterprise and South Africa $18.89-million to fund five blockchain and cryptocurrency companies.

The report shows in detail how Africa has accelerated blockchain as a transformative force for society and the economy and how pioneers continue to reinforce the need for more unified action on regulation and infrastructure.

It also shows how funding outpaced all other sectors by 11 times.

The findings demonstrate how countries and stakeholder capitalists are beginning to step in and embrace Africa’s self-determining participation in the Fourth Industrial Revolution, CV VC and Standard Bank highlight.

"While it is a fact that African nations are among the fastest crypto adopters globally, the CV VC report moves past crypto. It looks at the underlying revolutionary blockchain movement, set to enable Africa to transact and interact for the well-being of its people and economies," CV VC notes.

The report highlights that companies raised $91-million in the first quarter of 2022, which is a 1 668% year-on-year increase from the first quarter of 2021.

Further, when comparing the first quarters of 2021 and 2022, venture capital funding for African blockchain startups far outpaces the growth seen in general African venture funding, which saw 149% growth during 2021.

Africa is the fastest adopting crypto continent globally, yet it has only a 0.5% share of total global blockchain venture funding, which stands at $25.2-billion. African blockchain funding of $127-million in all of 2021 is similar in size to a single blockchain mega-deal of which there were 59 globally.

Further, the regulatory challenges are clearing, as six nations have regulated blockchain and cryptocurrencies, and others are making headway, the report states.

"Blockchain in Africa is unique as it is driving from the bottom up, where essential industries are propelling forward with blockchain tech; agriculture, mining, remittances, inclusion, identity, and property, to name a few," CV VC and Standard Bank say.

"The African continent is emerging as a vibrant technology investment location. Sharp minds are driving valuable developments, and investment capital is seeping in, albeit still smaller than the rest of the world. Capital is being invested, despite the waters of conventional deal funnels being muddy caused by a lack of available data for potential funders, especially international ones," the companies add.

The report successfully depicts a holistic overview of blockchain in Africa, which will facilitate funders to make a better judgment of Africa's investment potential. CV VC published the inaugural report as part of the Blockchain Hub Conference taking place in Davos, Switzerland. The report provides a compelling structural overview of the emerging blockchain sector and insights regarding funding in Africa.

“While actively participating in Africa, we are amazed by the determination of the brilliant founders who are changing the future not just for their industries and nation but for the world,” says CV VC co-founder Mathias Ruch.

“In Africa, there is a mindset that complements Switzerland's determination, and a will to create well-being for its citizens and the future of humanity. As the world enters the decade of the Fourth Industrial Revolution, building on blockchain as a transformative tech, it is worth recanting the main theme of this year's WEF, which is ‘Working Together and Restoring Trust’. This is what CV VC intends to do with other drivers in Africa,” he notes.

“Africa is a reminder that there is a great need for everyone to work together to enable humanity to be well in all ways. The immediacy of existential threats as experienced by Africans requires a different pace.

“Africa’s difficulties are compounded by the pandemic that has disrupted revenues, foreign direct investment, development assistance, remittances, trade and tourism, and not forgetting the effects of war. African economies are in danger of even further marginalisation owing to macro trends towards economic deglobalisation,” says Standard Bank head of blockchain and centre of excellence Ian Putter.

“The silver lining has been the self-fast-tracking of Africa’s digital and tech economy. This has already bolstered resilience as a road map to how and why the world needs to embrace blockchain as a transformative technology,” he states.

Further, Standard Bank has been leveraging blockchain to bring speed and transparency to its customer base across Africa.

“We are very excited to work with CV VC as a blockchain ambassador to enable the further emergence of blockchain, as a resource on which Africa can build and outreach globally,” says Putter.

“Standard Bank has embarked on a journey to evolve beyond bank to become a digitally-enabled platform business. South Africa has the most sophisticated financial sector on the African continent. Although there are perceptions of regulatory uncertainty, South Africa is integrating cryptocurrencies into our economy and society by building regulatory frameworks, developing central bank digital currencies and actively participating in the blockchain community.

“Although initially cautious in their approach, South African regulators have been working hard to embrace new-age technologies and create a transparent regulatory environment that will further encourage its fast-paced blockchain and cryptocurrency adoption,” he adds.

“For Standard Bank, the blockchain offers a powerful platform on which to deliver innovative services more efficiently to help our client’s greatest problem,” Putter notes.

CV VC places great value in precision and knowledge sharing as drivers of innovation. Its objective with the ‘African Blockchain Report’ is to share a data-driven account of blockchain in Africa and begin an annual collation of benchmarkable venture data and solidly referenced African insights, says CV VC Africa MD Gideon Greaves.

“We focused the report on a data set of 40 African blockchain companies. This way, we can be sure of the relevance of facts from which we can benchmark forward. We are also very proud to give an assessment of the regulatory landscape and a magnetic introduction to some of the greatest blockchain minds on the continent,” he says.