The “funding winter” that has been impacting tech startups in Africa and worldwide shows no signs of easing up. Funding in the first quarter fell by over 50% to $310 million, compared to $650 million in the same quarter of the previous year.
The ninth edition of the African Tech Startups Funding Report, published in January by Disrupt Africa, Flourish Ventures, AAIC Investment, and Atlantica Ventures, revealed that over the course of 2023, a total of 406 startups raised a combined sum of $2.4 billion.
These numbers indicate a reset for the African tech industry as the effects of a global capital shortage take hold. The number of funded startups declined 35.9% from the 633 that acquired funding in 2022, while the total combined funding of $2.4 billion was 27.8% less than the $3.33 billion raised in 2022.
Hopes for an increase in investment in 2024 were dashed by a bleak Q1, with funding amounting to just $310 million in the first three months, a 52.3% decrease compared to the $650 million raised in the same period of 2023. The rate of decline remained relatively consistent, with Q1 2023 funding down by 57.2% from Q1 2022.
The number of funded ventures dipped slightly in Q1 2024 compared to Q1 2023, from 87 to 82. Nevertheless, the rate of decline is slowing, considering that 175 startups succeeded in securing funding in Q1 2022. Regardless, if funding levels remain stagnant, 2024 is anticipated to surpass 2023 in terms of decreased funding for African tech ventures.
