Last year, startups across Africa raised a total of $2.9 billion in 2023, which was a 39 per cent year-on-year drop in funding.
According to a report by ‘Africa: The Big Deal’, which monitored deals announced by startups on the continent, it disclosed that in 2022, the firm said African startups raised $4.8 billion.
However, the report noted that despite the decline, the result for African startups was better than what many had feared due to the funding slowdown in the year. It further revealed that 500 start-ups raised at least $100,000 in Africa in 2023, compared with 821 in 2022. This also represents a 39 per cent year-on-year decline. Giving more insights into the 2023 funding, the report said: “Last year, startups in Africa raised at least $2.9 billion through deals $100k and above. That’s if we count all types of deals (equity, debt, grants, etc.), but exclude exits. For reference, we tracked 19 exits in 2023 worth over half a billion dollars, almost entirely thanks to two Tunisian success stories: InstaDeep’s acquisition by BioNTech and Expensya’s acquisition by Medius. “Funding on the continent fell -39 per cent YoY. In the context of a global slowdown in VC activity, this performance is better than most might have feared. 500 start-ups raised at least $100k in Africa in 2023, compared to 821 in 2022 (also -39 per cent YoY). This therefore means that the average deal size has remained stable between 2022 and 2023, again an encouraging fact given the global climate.” Painfully, the report noted that many startups in Africa have turned to debt to finance their growth. It observed that the amount of debt raised reached $1.1 billion, a +47 per cent growth YoY, while equity funding fell by -57 per cent during the same period. “In 2022, start-ups in Africa had raised 19 cents of debt for every $1 of equity they’d secured. In 2023, this number went up to 65 cents, and debt made up 38% of all funding raised (vs. 16% in 2022)” the report stated.
