The weak global investment environment has continued its negative impact on African startup funding with investment deepening in the third quarter of 2023.
According to Disrupt Africa, the year is expected to see a decline in startup funding, which is consistent with current worldwide patterns. Compared to last year’s period, the $1.4 billion raised so far this year is down 48%.
The report also notes a gradual decline in quarterly totals, with $1.2 billion raised in the first half of this year compared to the first half of 2022. The $492 million raised in Q3 of this year, according to Disrupt Africa, “makes it the worst quarter of the year from a funding perspective.”
Less than half as much was raised for Africa during the same nine-month period in 2022 and 2021. Even after accounting for grants and loans, 2023 projections still fall far short of those for 2022 and 2021 (by 40% and 26%, respectively).
Mainly since early 2021, September funding was the second-lowest month for startup funding raised in Africa.
58% of the total investment raised last month was distributed across three transactions (equity plus debt): SunCulture acquired $12 million in debt, Wetility (South Africa) raised almost $48 million in a combination of loan and equity, and Lupiya (Zambia), managed by a woman, concluded its $8.25 million Series A round, the nation’s first $1 million or more deal thus far in 2023.
According to research, financing for African tech startups would decrease by 54% this year compared to last.
With VCs like Enza Capital, P1 Ventures, and Catalyst Fund closing $58 million, $25 million, and $40 million respectively, African startups will hopefully see improved funding received.
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