African startup funding declines in Q1 as VC downturn persists

BREAKING NEWSApril 4, 2024 at 12:20 PM UTC

TLDR

"Funding winter" continues for African tech startups as Q1 funding drops by over 50% to $310 million from $650 million last year.
Q1 2024 disappoints with only $310 million raised, a 52.3% decline from Q1 2023, showcasing a consistent decline trend.
Number of funded ventures in Q1 2024 slightly drops to 82 from 87, hinting at a potential surpassing of 2023's decline if current rates persist.

A "funding winter" impacting African tech startups, mirroring trends globally, persists unabated as Q1 funding plummeted by over 50% to $310 million from $650 million in the same period last year.

Initial hopes for a turnaround in investment in 2024 have been dashed by a disappointing Q1 performance, with funding amounting to just $310 million, a significant 52.3% decline from the $650 million raised by startups in Q1 of 2023, per data from Disrupt Africa. The rate of decline remained relatively consistent, with Q1 2023 funding decreasing by 57.2% compared to Q1 2022.

The number of funded ventures in Q1 2024 marginally decreased compared to Q1 2023, dropping to 82 from 87. If funding levels persist at current rates, 2024 is poised to surpass 2023 in terms of declining funding for African tech ventures.

Key Takeaways

The optimism of the VC landscape in 2022 sharply contrasted with the sobering reality of 2023, as global funding plummeted by approximately half in the first half of the year. This significant downturn correlated with increases in interest rates, which had a chilling impact on fundraising activities. For every 1% increase in interest rates, there was a concerning 3.2% decline in VC capital. This tightening financial environment not only diminished the available pool of VC funds for startups but also rendered debt financing, a potential alternative, less feasible due to elevated borrowing expenses.

Venture Capital

Startups

VC Funding

Disrupt Africa

Africa

African Startups