Startup funding falls to $470m, says data firm

Startup funding to Nigerian startups has fallen to $470m in the last year (July 2022 to June 2023).

This was a 77 per cent dip from the $2bn that the Nigerian startup ecosystem attracted between July 2021 and June 2022, according to Africa: The Big Deal. According to the data insight firm which monitors funding above $100,000 on the continent, funding into the African startup space has declined by 80 per cent in general.

Between July 2021 and June 2022, the big four in Africa raise a total of $4.6bn, which has now fallen to $1.73bn between July 2022 and June 2023.

It said, “The Big Four jointly raised $4.6bn between July 2021 and June 2022 with Nigeria topping the charts (over $2bn) followed by Kenya (just short of $1bn), South Africa, and Egypt. Four other countries (Senegal, Ghana, Tunisia, Tanzania) had crossed the $100m mark and another 7 claimed more than $10m.”

Explaining the decline in the last year, it noted, “In absolute and relative terms, funded contracted the most in Nigeria (-77 per cent YoY i.e. ÷4.3), which means the giant lost its #1 spot to Egypt where the fall was the most moderate of the Big Four (-25 per cent YoY). Egypt is the only ecosystem to maintain itself over the half-billion mark.

“In South Africa, the amount was halved (-53 per cent); in Kenya, divided by 3.2 (-69 per cent). Beyond the Big Four, in all four markets where over $100m had been raised during the heatwave, the amount raised decreased dramatically during the ‘funding winter’: -68 per cent YoY (÷3.1) in Tanzania, -81 per cent YoY (÷5.4) in Ghana, ÷20 in Tunisia and ÷27 in Senegal (from $222m to $6m). Four of the seven markets where $10m to $100m was raised during the heatwave also suffered very significant losses (DRC, Namibia, Zambia, and Uganda). In Morocco, the amount of funding raised was roughly flat YoY.”

Despite the decline that was recorded in the major markets, funding grew in Côte d’Ivoire (+15 per cent YoY), and in Cameroon (+34 per cent) where it crossed the $10m mark, and Algeria where funding grew to $150m from $30m.

Global startup funding has been on a decline due to an economic downturn and a rise in inflationary pressures.

Funding into African startups fell by 57.2 per cent year-on-year to $649.30m in the first quarter of 2023, according to Disrupt Africa.

According to the Co-founder of Dream VC, Mark Kleyner, the decline in funding in the ecosystem is not all down to a downturn in global realities.

He noted that investors were increasingly becoming interested in the professionalism and ability of startups to become profitable.

He said, “I would say the biggest change is the way investors are interacting with founders – the seriousness or professionalism around investing.