January 18, 2024

Funding For African Startups 2023: Down But Not Out

Last year, African startups raised $2.9 billion in deals worth $100,000 and above (excluding exits).

Although this amounts to a 39% drop compared to 2022, the continent is showing signs of resilience.

Shifting investor landscape

In 2023, Techstars was the top investor with 56 deals, surpassing Launch Africa. Other key players included Founders Factory Africa, Ventures Platform, Norrsken, and Y Combinator.

All but Norrsken did fewer deals in 2023 than in 2022. For example, YC added only 12 African startups to its 2023 cohorts, compared to 43 in 2022 and 37 in 2021.

Moreover, the count of unique investors in Africa dropped by 38% to 619. This change reflects the decrease in both overall funding and the number of ventures raising $100,000 or more.

The challenging global market has seen foreign investors pull out of Africa and local fund managers stepping up to fill the vacuum left behind.

In 2023, local investors from Africa made up 40% of return investors, compared to a third of investors who had not previously invested in 2021 and 2022.

Nevertheless, many investors remain heavily committed to investing in Africa, with at least 188 investing on the continent in 2021, 2022, and 2023.

Underinvested but resilient

Africa continues to be underinvested, representing less than 1% of global equity funding.

It faced a 57% year-on-year (YoY) drop in equity funding last year, tied with Latin America for the biggest drop.

Nevertheless, the region is showing long-term resilience.

Along with Europe, Africa was one of two regions to see an increase in equity funding from 2020 to 2023, growing by 76% YoY.

Global decreases in venture capital also saw more startups turning to debt to finance their growth, the Big Deal reports.

Featured image credit: Founders Factory Africa

Samara Linton

Community Manager at POCIT | Co-editor of The Colour of Madness: Mental Health and Race in Technicolour (2022), and co-author of Diane Abbott: The Authorised Biography (2020)