Venture funding in Africa sees sustained decline in Q3

STARTUP VENTURE CAPITALOctober 4, 2023 at 11:10 AM UTC

In the third quarter of the year, African tech startups managed to secure a total of $492 million in funding, bringing the cumulative figure for the first nine months of the year to $1.4 billion. But this marks a significant decline of 48% compared to the corresponding period in 2022, underscoring the ongoing impact of the global capital crunch on the continent's startup ecosystem.

The latest edition of the annual African Tech Startups Funding Report revealed that in 2022, a total of 633 African tech startups collectively raised an impressive $3.3 billion. This represented remarkable growth, with the number of funded startups increasing by 12.2% compared to the 564 startups funded in 2021. Additionally, the total secured funding witnessed a substantial increase of 55.1% from the $2.1 billion raised in 2021.

However, the current year is shaping up to be a regression in terms of funding, aligning with global investment trends that are experiencing a "reset" following a period of tremendous growth in previous years.

Key Takeaways

So far in the current year, only 186 ventures have managed to secure investment, amassing a total of $1.4 billion. This figure reflects a significant drop of 48% compared to the $2.7 billion raised during the first nine months of 2022. To put this in perspective, the first three quarters of the previous year accounted for over 80% of the total investment for the entire year of 2022. Therefore, if the current trajectory persists, it appears that year-on-year funding in the African tech startup ecosystem is on track to decline by more than half or 54%. Africa managed to defy this funding downturn trend last year but as we enter the tenth month of 2023, the inevitability of startup shutdowns has now reached the continent. Last week, Kenyan logistics startup Sendy entered administration after failing to find a buyer while Nigeria-based genomics startup 54gene also initiated a shutdown. In the prior six to seven months, at least five such shutdowns were recorded based on publicly disclosed information.