Disrupt Africa // African Tech Startup Funding Declines in Q1 2023

Disrupt Africa // African Tech Startup Funding Declines in Q1 2023

African tech startups raised US$649,303,000 between January 1 and March 31 this year, down 57.2 percent of the total from the corresponding period in 2022, as the sector begins to feel the bite from the global economic climate.

According to the most recent edition of the annual African Tech Startups Funding Report released by Disrupt Africa, 633 African tech startups raised a combined US$3,333,071,000 in 2022.

This represented incredible growth. The number of funded startups increased by 12.2 percent to 564 in 2021, while the total secured funding jumped 55.1 percent to US$2,148,517,500 in 2021.

This year looks set to be a regressive one, however, as so far only 87 startups have secured funding, less than half the number (175) that had done so by this time last year.

And those startups have between them taken in a combined US$649,303,000, down from US$1,515,556,000 by April 1, 2022.

Last year’s Q1 ended up accounting for around half the startups and half the total investment for the whole of 2022, so if the current trajectory holds then year-on-year funding looks set to decline by more than 50 percent.

Booming African Tech Scene in 2022

In 2022,-the tech start-up scene looked quite promising with Investment in Africa’s tech startup ecosystem passed the $3 billion mark for the first time with Nigeria remaining the apple of investors’ eyes and fintech continued to be the sector that receives the most money.

This according to the 2022 African Tech Startups Funding Report by Disrupt Africa,  showed that startups raised more funding than ever before, in spite of a global downturn in investments, especially in riskier asset classes such as venture capital.

The researchers said that a total of 633 startups in Africa raised a combined $3.3 billion in 2022. This was 55.1% more than the $2.15 billion raised in 2021 by 564 African startups.

Total annual funding for African tech startups has increased by over 1,000% since 2015, according to the report.

The funding decline in Q1 could raise a number of questions, however, from a recently held session at Nairobi Garage with investment analysts and business owners coming together to share their experiences and insights. the African Startup Scene, the panelists stated that the African Startup Scene has experienced a positive trajectory of growth. and it was great to see how far it has come.

During the session, the panelists also highlighted that the continent had made significant strides, and it was exciting to see the potential it holds they talked about which sectors are receiving more attention at the moment, and we found out that some of these include: e-mobility, climate-tech, health-tech, fintech, and e-commerce to be some of the most sought after sectors.