Africa’s startup ecosystem shows resilience amid global downturn
With over $1 billion raised in the first half of 2023, Africa’s startup ecosystem shows resilience in the face of the global venture capital funding downturn.
Despite venture capital (VC) funding slowly retreating from the African market this year, the continent’s startup ecosystem continues to perform well compared with more mature markets, according to figures from PitchBook, a capital market company.
In 2022, Pitchbook recorded $2.9bn invested across 689 venture rounds in Africa, making it the only region with a year-on-year increase in both deal value and count.
However, in Q1 2023, VC-backed African companies completed only 91 deals, worth $419m, a big drop on the 257 rounds totalling $948m in the same period last year.
Nevertheless, while the number of deals stood at pre-2020 levels in Q2, the capital raised climbed to bring the total to $1.1bn in the first six months of the year.
“Investors in the region were already anticipating a more muted dealmaking environment this year, with foreign investment in the continent expected to retreat to core markets. But while it has seen a slowdown, Africa is weathering the storm better than more mature markets,” writes Leah Hodgson, a senior analyst at PitchBook, on the company’s blog.
Nigeria, Kenya, and South Africa accounted for more than half (127) of all deals closed by startups in Africa during Q1 and Q2 of 2023.
Source: African Business