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African Blockchain Startups See Massive Influx of Venture Funding

Africa could become a powerhouse in the blockchain space in the near future, according to research.

 

Swiss investment company Crypto Valley Venture Capital has highlighted the rise in the volume of funding that has entered Africa’s blockchain space in recent times. In a recent release, the firm noted a substantial increase in this year’s Q1 funding compared to 2021’s.

Venture Funding Grows 11 Times in Q1 2022

The Swiss company CV VC recently released its publication, The African Blockchain Report 2021, in conjunction with South-Africa-based Standard Bank. 

Notably, the research is coming after CV VC noted the absence of information related to African companies in the blockchain space. The investment firm initially clamored for information regarding funding, regulations, developments, and overall data in Africa’s blockchain field.

According to the report, blockchain-centric startups gathered $91 million in 2022’s first quarter. In the first four months of 2021, the year-on-year increase in cash intake rested at 149%. As of Q1 of 2022, CV VC reports that the YoY increase has surged to an outstanding 1668%, more than 11 times the previous figure. 

Fast Rate of Crypto Adoption

Indeed, the growth in funding owes to the increasing rate of crypto adoption in African countries. The growth is even more impressive, considering the near non-existence of pro crypto laws in many African countries.

In similar fashion, CV VC shared that Africa has seen the number of its crypto users expand quicker than other regions worldwide. Gideon Greaves, the investment firm’s Managing Director for Africa, spoke along these lines. 

He stated that African establishments can kick off a smooth and quick entrance into markets via blockchain: 

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.”

Africa Could Dominate Blockchain-Based Business

While venture capital for African blockchain companies has exceeded funding to other types of startups in the region, the CV VC report points out that Africa’s blockchain scene is yet to see any massive deals. Although in this case, “massive” is subjective.

Most recently, crypto exchange platform MARA  raised $23 million in venture funding ahead of its launch. And like MARA, the space continues to attract an influx of investors. 

Expansion Amidst No Legal Frameworks

Given these happenings, Greaves expects the continent to produce unicorns in the next few years. According to Greaves, one advantage these new African companies have is the absence of legacy infrastructure. Startups can incorporate and utilize newer technological developments without worrying too much about navigating legal hoops. These systems will allow for speed, flexibility, efficiency and improved security, among several benefits. 

As Greaves has noted, Africa is on track to house organizations that cater to customer bases scaling millions. He predicts that in under five years, the region will be ahead globally as it leverages blockchain technology faster than many regions. The continent has the proper tools, the drive and a population large enough to achieve this.

CV VC to Support 100 Blockchain Startups

Notably, Crypto Valley Venture Capital has created a fund to invest in 100 African startups within the next four years. The Swiss firm aims to raise between $10 to $50 million worth of funding. So far, they have been able to support 12 companies within the target region. 

One of the companies that have received funding from CV VC is Leading House Africa, a Nigeria-based startup. Leading House allows individuals to register ownership of land on the blockchain. A recent report uncovered that inadequate traditional financial structures prompted Nigerians to turn to cryptocurrency.

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The west-African nation raised 39.05% of the total capital inflow Africa saw last year. CV VC also invested in Mazzuma, a Ghanian platform for mobile payments. The firm is focused chiefly on South Africa, Kenya, Ghana, Nigeria, and Egypt but is set to support companies across the continent.

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