Today, we are glad to announce our inaugural State of Funding in Africa report.
The report, which aims to provide a comprehensive view of the African tech funding ecosystem, reveals that, in line with the global downturn in venture capital funding, the African tech sector saw a significant slowdown in 2023.
Here are a few highlights from the report:
- 2023 witnessed a marked further shift from the breakneck pace of 2021, with overall funding figures declining compared to the previous year's record highs. African startups raised $2 billion in equity funding in 2023, a 43% decline compared to the 3.3 billion raised in the previous year. While this might seem like a downturn, it reflects a maturing ecosystem prioritizing quality over quantity.
- The traditional "big four" of Nigeria, Egypt, Kenya, and South Africa retained their position as top investment destinations. However, Ghana was displaced by DRC Congo as the fifth-ranked country, highlighting the potential for new hubs to emerge.
- While funding figures decreased, Fintech's share of funding accelerated from 30% in 2022 to 50%. This was a result of the overall funding decline which exaggerated the place of fintech in the funding circle.
- Cleantech, Mobility, and the e-commerce sector followed, showcasing areas of continued investor interest. However, emerging sectors like AI are poised for future growth, with early signs of a boom on the horizon.
- Profitability and strong unit economics returned to the forefront as the most relevant business metrics for startups. This shift, while challenging for early-stage ventures, signifies a maturing ecosystem where proven business models and solid execution take centre stage.
To download the full 2023 State of Startup VC Funding in Africa Report, click here.