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Rwandan Tech Startups Raised over $4m in Financing in 2020

 

Rwandan start-ups raised an estimated $4 million (Rwf3.9 billion) in financing in 2020 in comparison to about $1,150,000 raised in 2019, the latest Africa Tech Startups Funding Report has shown.

The funding report by Disrupt Africa, a tech analysis platform, was developed from a record of funding rounds over the year, including those that were disclosed publicly as well as the ones that were not announced.

While financing to Rwandan firms was $4 million, African start-ups totaling 397 raised $701,460,565, a major leap from $185,785,500 that was raised by 125 start-ups in 2015.

The report noted that the $4 million in Rwanda was raised by two startups; Kasha Rwanda and GET IT.

Despite only two firms getting financing, the capital raised in Rwanda was up 248 per cent from $1,150,000 raised in 2019.

The two firms are in e-commerce and logistics.

Kasha Rwanda, an e-commerce platform involved in hygiene and self-care products raised $3m from Finnfund, United States International Development Finance Corporation and Swedfund to make it the most financed local start-up.

GET IT, a commercial food distribution service company raised funds from a Chicago-based impact investor VestedWorld as well as Chandaria Capital, a professional early-stage investment arm of the Chandaria Group of companies.

In 2020, the number of investors in start-ups on the African continent was found to have gone up to at least 370 active investors; marking 42.8 per cent growth on the previous year.

“The number of active investors on the continent continues to grow exponentially, at all stages, and with funding spreading across more geographies and an increasing number of verticals, the future looks very bright indeed,” the report read in part.

Financial Technology remains the most attractive to investors on the continent with the combined amount raised by fintech companies over the course of the year at $160,319,065, about 49 per cent of the investment.

Other sectors that seemed investors’ favourites include entertainment, e-health, e-commerce and Human Resources.

“With a large range of institutional investors, VC firms, family offices and angels active in Africa, there is clearly an increasing confidence and interest in backing startups on the continent across all stages of the startup lifecycle. While the 370 investors tracked in 2020 already displays impressive growth on previous years, the figure is in reality likely to be much higher, given the host of deals where investors – angels in particular – chose to remain anonymous or were not announced by the startup in question,” the report’s authors noted.

The investments that stood out by value were; Egyptian e-health venture Vezeeta (US$40,000,000), Nigerian fintech Flutterwave ($35,000,000), South African retail-tech startup Skynamo (US$30,000,000), Kenyan agri-tech company Twiga Foods (US$29,400,000), and Kenyan conservation tech solution Komaza (US$28,000,000).

Four countries remain dominant in investor preference; Nigeria, Kenya, South Africa and Egypt with a total of 307 startups from the 4 countries accounting for 77.3 per cent of funded ventures on the continent.

Rwanda is looking to attract alternative financing for early stage ventures with the new law relating to investment promotion and facilitation.

Louise Kanyonga, the Chief Strategy and Compliance Officer at Rwanda Development Board (RDB) recently told The New Times that this is aimed at bridging the existing gap currently in terms of the right financing options for early stage firms.

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The push to provide incentives to angel investors is based on the fact that conventional sources of financing for startups such as commercial banks are not working currently.

Among the incentives include that angel investors investing a maximum of $500,000 in a start-up will be eligible for exemption from capital gains tax upon the sale of shares, provided the shares were initially purchased as a primary equity issuance by the start-up.

Angel investors will also be eligible for exemption from withholding tax applicable to dividends paid for five dividend issuances by the start-up