The most recent report on African blockchain fundraising published by CVVC, in 2022 says African blockchain companies raised a total of $474 million in capital, representing a 429% increase from the amount of funding raised in the previous year.
The category of “custody and exchanges” brought in over $250 million, which is comparable to more than half of the total funds raised by blockchain businesses. Blockchain companies based on the continent raised a total of $474 million in 2022, which represents a year-on-year funding increase of 429%.
According to the research, the continent’s total blockchain funding in 2022 was achieved through around 29 deals, which is approximately four higher than the 25 that were closed in 2021.
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How African Blockchain Has Been
As the use of cryptocurrencies continues to skyrocket across Africa, the continent’s Blockchain ecosystem has been expanding at a rapid rate to keep up with the demand. During the first half of 2022, blockchain startups in Africa were able to raise a total of $304 million in capital.
Between the first quarter of 2021 and the first quarter of 2022, funding increased by 1,668 percent, going from $5.1 million to $91 million. This growth was reported by the African Blockchain 2021.
The report also highlighted that the lack of shared legacy financial systems and an immense population that primarily consisted of unbanked residents contributed to the popularity and growth of cryptocurrencies on the continent. Both of these factors contributed to the popularity and growth of cryptocurrencies on the continent.
The highest amounts of Bitcoin venture money have recently flowed into Nigeria, Kenya, and South Africa, respectively. There has also been a rise in the use of crypto-centric payment methods, which saw an increase of 1,200% between July 2020 and June 2021.
Ian Putter, Head of the Blockchain Centre of Excellence at Standard Bank and Blockchain Research Institute Africa Regional Director, made the following observation in response to recent developments: “Countries like South Africa, Kenya, Nigeria, and Ghana have seen a rapid uptake of crypto assets to access more efficient payment trails provided by blockchain networks and yield returns on income with assets like Bitcoin, or stablecoins pegged to the value of the US dollar.”
How Venture Round Contributed to African Blockchain Funding
Several different funding mechanisms have been put into place to assist blockchain companies in their efforts to resolve issues on the continent. According to CV VC, the Venture Round (Series A–C rounds), which is one of the funding techniques that was used, was responsible for the majority of the funds that were raised on the continent. About 10% of the total came from several other sources of funding.
Over ninety percent of the funding that was raised by African blockchain companies in 2022 came from entrepreneurship investments through venture rounds. This was accomplished through a total of 12 separate transactions, which resulted in the accumulation of 426 million dollars. In 2021, the take for Venture Rounds was lower, coming in at 42.8%, with $38.3 million coming from 6 deals.
The term “venture round” refers to a type of investment round in which a company solicits financial backing from third-party investors in exchange for ownership stakes in the business. Venture capitalists, angel investors, and various other types of institutional investors typically take the lead in these endeavours.
There are many different types of venture rounds, such as seed rounds, Series A, B, C, and beyond, each of which involves a bigger valuation of the company as well as a more significant investment than the round before it. These rounds are a reflection of the growth of the company and its potential for further success in the future.
