Why African startups have raised more funding in 2022 than last year

2022-12-18 21:39:29
Why African startups have raised more funding in 2022 than last year

This year, the global downturn in terms of venture capital (VC) funding affected nearly every region, with Africa being the only exception.

For context, Africa was the only region to record three-digit growth in the first quarter of 2022. Last year, 604 African startups raised a record-high figure of $5.2 billion, according to the African Private Equity and Venture Capital Association (AVCA), an industry group.

Africa is the only continent to record growth in VC funding in 2022

In truth, 2022 has been a remarkable year for African startups. According to The Big Deal, a newsletter that tracks funding in Africa, the continent is on course to record more VC deals before the end of 2022 than in the previous year.

So far, African startups have now raised more funding in 2022 than in 2021. As of December 1, the number stood at $4.6 billion in total.

Not only have startups on the continent crossed the $1 billion mark in terms of funding raised earlier than ever before, but they have also raised their first $2 billion faster than they ever had.

Why VC funding in Africa is on the rise

Compared to last year, startups across the globe raised significantly less venture capital funding in 2022. For context, Crunchbase data shows that global venture funding fell to $39 billion in May, marking the first month in more than a year when it dropped below $40 billion.

Experts have since attributed the slowdown to venture capitalists becoming more frugal with their money.

But while VC funding reduced by 3% in the first half of this year compared to last year, African startups on the other hand recorded a 133% increase. The reasons for this aren’t far-fetched.

For starters, Africa — thanks to its large population and huge market — has become one of the most attractive tech hubs for investors in recent years, spurring venture capitalists to pump money into African startups.

Source: technext.ng


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