Startup funding in Africa dipped 39% to $2.9bn in 2023
In 2023, African startups secured a total funding of $2.9 billion, marking the lowest amount since 2020's $2.1 billion. This represents a 39% decrease from the around $4.6 billion total recorded in 2022, according to data from funding tracker Africa: The Big Deal.
The funding landscape for African startups witnessed a quarter-on-quarter decline throughout 2023. TechCabal reports that it started with $1.2 billion raised in Q1, followed by $877.8 million in Q2 and a further drop to $492.7 million in Q3. However, there was a slight increase in Q4, where startups raised $551.2 million.
It's important to note that this decline in venture funding is not unique to Africa; it aligns with a global trend. According to Crunchbase, the flow of venture capital funding has been consistently decreasing since January 2022, which was the last time global tech funding exceeded $60 billion per month.
The outlook for 2024 in the startup and tech investment landscape suggests a more cautious and frugal approach from investors. Forecasts indicate that investors are likely to be more discerning in choosing where to allocate their funds. According to insights from TechCabal, at least 10 out of 23 tech leaders interviewed for its 2023 Wrapped article shared the expectation of encountering more cautious investors, leaner startups, and challenging economic conditions, particularly in the first half of the year. This sentiment is not limited to the African tech ecosystem; global funds such as Thomvest Ventures and QED have also expressed similar predictions. The overall trend suggests a more prudent and selective approach from investors, possibly leading to increased scrutiny of startup business models and a focus on sustainable growth. The anticipated caution and frugality may pose challenges for startups seeking funding in the coming year.