African Blockchain Scene Attracts Record-Breaking Investments

The crypto market might have experienced a meltdown in 2022, but that hasn’t discouraged venture capitalists to continue- and actually increase – their investments in the blockchain scene in Africa. If their investments reflect their belief in the future of blockchain, then it is clear that blockchain and crypto enjoy an unwavering trust in the African continent.

Blockchain companies from Africa amassed 304 million USD in funding in the first half of 2022 alone. This is almost triple the investments received in 2021, which amounted to 127 million USD, according to a report dated from August 3rd. 

During the first three months of 2022, companies had raised 91 million USD, followed by additional fundraising rounds in the second quarter of the year delivering additional 213 million USD in investments.

KuCoin, Africa’s first “decacorn”

The absolute record-breaker in attracting the most funding was KuCoin, a cryptocurrency exchange based in the Seychelles. KuCoin managed to raise 150 million USD in a pre-series B funding round, which resulted in its valuation reaching 10 billion USD. 

Notable investments were also attracted by crypto exchange Mara, who raised 23 million USD, as well as the Jumbo startup that raised 30 million USD.

Afriex, the blockchain based payment system raises $10 million

The 2019-founded Nigerian startup Afriex raised 10 million USD, for their blockchain-based money transfer app. The Afriex story perfectly pictures the dire need of underserved African consumers in having ease-of-access and reliability in managing their money, as we will see next. 

One of the Afriex founders, Tope Alabi, had gone back to Nigeria in 2019 after spending 20 years in the US. He was determined to bring to Africa the knowledge he gained while working for the blockchain company Consensus, in order to meet some of the pressing needs of the often overlooked people in the African continent. He and his cofounder, John Obirije actually looked at several ideas using blockchain technology – from trivia games to chat bots – all of which had failed. 

But a common thread in all these undertakings was the founders’ difficulty in trying to pay different businesses with the money they were holding in U.S. bank accounts. This is when Alabi and Obirije decided to work on a money transfer app instead.

The outcome was Afriex, a blockchain-based platform that enables fund transfer by converting those funds to stable coins (cryptocurrencies backed by reserve assets). The result of this way of doing things is that transactions are faster and free, resulting in instant traction and adoption by users. Today Afriex processes monthly transfers of more than 5 million USD in value, and its user base has increased in the last 6 months by 500%. As a comparison, Wise processes monthly volumes of over 5 billion USD, but they charge 6.45% in fees and their transfers can take up to a few days to settle.

And this might be just the beginning…

Even with the massive increase in investments in the African blockchain scene, the continent only accounts for 0.5% of the global blockchain funding that took place in the first 6 months of 2022.

According to the African Blockchain Report published by the Standard Bank Group, the African blockchain industry, though still in its infancy, possess a lot of “untapped and unfathomable” potential. The report details the success stories of tens of “unicorn” and “decacorn” companies from the continent who are doing stellar work in using blockchain technology to solve some of the pressing needs in the communities they operate in.