Venture debt in Africa grew 47% in 2023 amid funding slowdown

Daba Finance/Venture debt in Africa grows 47%

STARTUP VENTURE CAPITALJanuary 6, 2024 at 5:41 PM UTC

In Africa, many startups have increasingly turned to debt as a means to finance their growth. The amount of debt raised reached $1.1 billion, reflecting a significant YoY growth of +47%. In contrast, equity funding during the same period experienced a decline of -57%.

In 2022, startups in Africa secured 19 cents of debt for every $1 of equity raised. However, in 2023, this ratio increased to 65 cents, with debt comprising 38% of all funding raised, a notable surge from 16% in 2022.

Despite a -39% YoY decline in funding on the continent, this performance is viewed relatively positively in the context of a global slowdown in venture capital activity. In 2023, 500 startups raised at least $100k in Africa, compared to 821 in 2022, representing a -39% YoY decrease.

Key Takeaways

In the past year, startups in Africa collectively secured at least $2.9 billion through deals amounting to $100k and above. This comprehensive figure encompasses various types of deals, including equity, debt, grants, and others, while excluding exits. It's noteworthy that in 2023, there were 19 exits totaling over half a billion dollars. The significant contribution to this exit value came primarily from the successful acquisition of two Tunisian startups: InstaDeep, acquired by BioNTech, and Expensya, acquired by Medius.

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