MAGNiTT, a data analytics platform has revealed that the African startup ecosystem experienced a significant decline in the first half of 2023.
According to the platform, venture capital firms invested $951 million during this period, representing a 54% decrease compared to the previous year’s first half.
“The number of completed deals also saw a substantial drop of 50%, with VC firms finalizing 214 deals, including one mega deal, in 2023.”
Despite the decline, fintech remains a preferred sector for VC firms, as they allocated 29% of the total funding to fintech startups.
E-commerce and transport/logistics startups secured 12% and 11% of the overall financing, respectively.
Noteworthy investments include $260 million received by fintech startup Mt Halan in February, $78 million raised by Tyme Bank in May, and a $55 million investment in transport and logistics company M-okpa, also in May.
Nigeria led the way in terms of deal volume, with Kenya and South Africa following closely.
However, in terms of deal value, Egypt took the lead, largely driven by the $260 million investment in MNT Halan in February.
South Africa experienced a 3% decrease in deal value, followed by Nigeria.
“Interestingly, accelerators led most investments in the first half of the year, surpassing VC firms,” Tech in Africa reported. They were responsible for five out of the top 10 investments during this period.
“The most active investors were all accelerators, with ARM Labs Lagos, Catalyst Fund, The Baobab Network, and Norrsken Global taking the lead, with 13, 19, 9, and 8 deals respectively.”
In terms of investment value, the top 10 investors were all foreign, with Chimera Capital, Tencent, Blue Earth Capital, Sumitomo Corporation, and Apis Partners leading the pack.
Regarding exits, there have been 15 so far, accounting for 25% of the total expected exits in 2022, which is 60.
Kenya has reported the highest number of exits thus far, with four.
As the VC funding crunch continues, investors seem to be shifting their focus towards early-stage startups.
Approximately 57% of total investments in the continent are directed towards early-stage businesses, representing a 5% increase from the statistics in 2022.