African startups received $4.1 billion in total funding in June 2023, a decrease of 37% year over year, according to data from Africa: The Big Deal.
African startups received $4.1 billion in total funding in June 2023, a decrease of 37% year over year, according to data from Africa: The Big Deal.
According to information gleaned from a database on the African startups ecosystem, funding fell from $6.5 billion in June 2022 to $4.1 billion in June 2023.
Additionally, it showed that every ecosystem index decreased, with funding raised through equity transactions falling to $2.1 billion (through 560 transactions) from $5.6 billion (through 860 transactions) in June 2022. Also, from 1,100 in the previous period, there were 800 fewer unique investors.
The data insight company noted that in Q1 2022, the US and China experienced the start of the funding winter, which spread to all continents except for Africa in Q2. The funding winter is characterised by a y-o-y decline in funding raised by local start-ups.
By Q3, it had established itself worldwide, and a year has passed since Africa slid into the funding winter, according to the report.
“However, before we compare the change in season between the most recent 12-month period (July’22-June’23) and the prior period, it is worth noting that July’21-June’22 was in fact a heatwave: It was the consecutive 12-month period during which the ecosystem in Africa experienced the highest levels of funding activity, both in terms of total amount raised ($6.5bn) and total number of equity deals (860). It intensifies how icy the winter is in funding.
Despite this, according to the company, 81 percent of equity funding was being used in the Big Four (Nigeria, South Africa, Kenya, and Egypt).
“This doesn’t mean some markets weren’t hit harder than others,” the statement continued. Fintech remained the industry attracting the most equity funding, but its lead shrank from 53% to 43% as a result of this decline.
This is largely due to the fact that there were seven fintech mega deals worth $100 million or more during the heatwave, as opposed to just one in the previous 12 months (MTN-Halan in February 2023).
With 84% of funds raised during the period going exclusively to start-ups with male investors, male-funded businesses continue to rule the African startup scene. Female startups received pitiful funding, with female CEOs receiving only 7% of the total.