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Blockchain Funding in Africa Beats Others down 11 Times: Report

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Africa’s blockchain venture funding growth was 11 times the growth of general venture funding growth in the first quarter (Q1) of 2022 when compared to the same period in 2021.

Blockchain companies in Africa raised $91 million in Q1 of 2022, representing a staggering 1,668% year-on-year (YoY) growth from Q1 of 2021.

On the other hand, general Africa venture funding only grew by 149% within the same period.

These figures are contained in the inaugural African Blockchain Report 2021 launched on Monday by Crypto Valley Venture Capital (CV VC), a Swiss blockchain investor, at the Blockchain Hub in Davos, Switzerland.

According to CV VC, the report was produced from a data set of 41 African blockchain startups that raised funding from January 2021 through March 2022.

The report, which was produced in partnership with Standard Bank, a major South African bank and financial services group, relied on various sources, including public databases, research reports, LinkedIn profiles, reputable news outlets and press releases as well as investors and entrepreneurs.

In addition, CV VC launched an Africa-focused fund to support blockchain startups in the continent on Monday.

The venture capital firm noted that the fund will be used to invest in 100 startups in Africa over the next four years.

Financing Africa’s Blockchain Industry

According to the report, of the total $127 million the African blockchain industry attracted in 2021, fintech businesses raised the most funding ($67 million), representing 53% of all blockchain funding.

However, exchanges and fintech businesses together account for $101 million or 79% of all total funding.

The report noted that Africa has not yet seen any blockchain mega-deal yet (funding of over $100 million) although South African exchange, Valr came the closest when it hit a $50 million Series B round during the first quarter of 2022.

Additionally, the study noted that Africa has no cryptocurrency or blockchain unicorn yet, although it “expects to see these begin to emerge within the next two to three years.”

In their editorial on the report, Mathias Ruch, the Founder and CEO of CV VC, and Gideon Greaves, the company’s Managing Director of Africa, noted that the system being impacted the most by blockchain and cryptocurrency technologies in Africa are the older legacy systems fraught with red tape and inefficiencies.

“One of the main reasons for the success of new technologies such as blockchain is that they either allow these legacy systems to be bypassed in their entirety or create the means to reduce overarching frictions,” Ruch and Greaves wrote.

“Africa is riddled with these types of case studies where entrepreneurs have had a fertile starting ground as a result,” they added.

On his part, Ian Putter, the Head of Blockchain COE at Standard Bank, explained that the explosion of SMEs and entrepreneurship in several African countries, and the innovation in fintech, particularly blockchain technology, are being propelled forward to drive the improvement of financial infrastructure.

“Countries like South Africa, Kenya, Nigeria and Ghana have seen a rapid uptake of crypto assets to access more efficient payment rails provided by blockchain networks and yield returns on income with assets like Bitcoin or stablecoins pegged to the value of the US dollar,” Putter wrote on the growing adoption of blockchain networks in Africa.

Africa’s blockchain venture funding growth was 11 times the growth of general venture funding growth in the first quarter (Q1) of 2022 when compared to the same period in 2021.

Blockchain companies in Africa raised $91 million in Q1 of 2022, representing a staggering 1,668% year-on-year (YoY) growth from Q1 of 2021.

On the other hand, general Africa venture funding only grew by 149% within the same period.

These figures are contained in the inaugural African Blockchain Report 2021 launched on Monday by Crypto Valley Venture Capital (CV VC), a Swiss blockchain investor, at the Blockchain Hub in Davos, Switzerland.

According to CV VC, the report was produced from a data set of 41 African blockchain startups that raised funding from January 2021 through March 2022.

The report, which was produced in partnership with Standard Bank, a major South African bank and financial services group, relied on various sources, including public databases, research reports, LinkedIn profiles, reputable news outlets and press releases as well as investors and entrepreneurs.

In addition, CV VC launched an Africa-focused fund to support blockchain startups in the continent on Monday.

The venture capital firm noted that the fund will be used to invest in 100 startups in Africa over the next four years.

Financing Africa’s Blockchain Industry

According to the report, of the total $127 million the African blockchain industry attracted in 2021, fintech businesses raised the most funding ($67 million), representing 53% of all blockchain funding.

However, exchanges and fintech businesses together account for $101 million or 79% of all total funding.

The report noted that Africa has not yet seen any blockchain mega-deal yet (funding of over $100 million) although South African exchange, Valr came the closest when it hit a $50 million Series B round during the first quarter of 2022.

Additionally, the study noted that Africa has no cryptocurrency or blockchain unicorn yet, although it “expects to see these begin to emerge within the next two to three years.”

In their editorial on the report, Mathias Ruch, the Founder and CEO of CV VC, and Gideon Greaves, the company’s Managing Director of Africa, noted that the system being impacted the most by blockchain and cryptocurrency technologies in Africa are the older legacy systems fraught with red tape and inefficiencies.

“One of the main reasons for the success of new technologies such as blockchain is that they either allow these legacy systems to be bypassed in their entirety or create the means to reduce overarching frictions,” Ruch and Greaves wrote.

“Africa is riddled with these types of case studies where entrepreneurs have had a fertile starting ground as a result,” they added.

On his part, Ian Putter, the Head of Blockchain COE at Standard Bank, explained that the explosion of SMEs and entrepreneurship in several African countries, and the innovation in fintech, particularly blockchain technology, are being propelled forward to drive the improvement of financial infrastructure.

“Countries like South Africa, Kenya, Nigeria and Ghana have seen a rapid uptake of crypto assets to access more efficient payment rails provided by blockchain networks and yield returns on income with assets like Bitcoin or stablecoins pegged to the value of the US dollar,” Putter wrote on the growing adoption of blockchain networks in Africa.

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