Q1 2023 Africa Venture Investment Report

The Q1 2023 Africa Venture Investment Report examines the impact of the global economic downturn on the venture capital ecosystem of the continent.

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2022 started off on a very strong note for Africa as it secured over $1.2Bn in the first three months of the year with 227 deals, the highest ever in a single quarter. Post Q1, the economic downturn caught up with the VC ecosystem as we saw the funding and number of deals decline gradually. However, there were talks of the continent bucking the trend of decline seen in its peer emerging markets, as it recorded a year-on-year incline (5%) in terms of the total number of deals. This year began on a very different note for Africa, while the first two months saw an increase in both funding and deals, however, March turned out to be the lowest funding month since February of 2021. Deals on the other hand have not seen this level since pre-pandemic times.

The picture looks even bleaker if we remove the impact of the $260M MEGA round recorded by Egypt-based Halan. The $288M raised in non-MEGA deal funding would mark Q1’23 as the lowest quarter for the continent in two years. The rising interest rates and inflationary pressures globally led African banks to increase their interest rates. Just last month, South Africa's central bank raised its main lending rate by a higher-than-expected 50 basis, garnering a lot of attention from the markets. The Central Bank of Nigeria (CBN) and Kenya Central Bank also have been raising their benchmark lending rate in an aggressive push to contain the nation’s inflationary pressure. The global economic pressures coupled with the issues already plaguing the continent such as regulatory volatility, food insecurity, adverse weather conditions, fragile geopolitical climate, and the collateral impact of the Russia-Ukraine war pumped the brakes on the rising VC ecosystem of Africa.

“The Big Four” continue to be the major driver of capital in the continent. Over 90% of the funding and almost 80% of the total number of deals was accounted for by the top four geographies, Nigeria, Kenya, South Africa, and Egypt. That is not to say that these countries were not impacted by the dwindling economic climate. Some major shifts were observed across the board, as Kenya and Nigeria saw an almost 90% decline in funding on a year-on-year basis owing to the lack of MEGA rounds this year. South Africa, on the other hand, recorded a 22% increase in funding albeit with fewer deals than last year. The tech ecosystem is supported by government initiatives and hence saw increasing investor participation this year. The most significant decline was reported by Egypt with only nine deals closed and $24M invested excluding the MEGA round from Halan.

Africa Country Comparison - Q1'22 vs Q1'23

Moving forward, the VC ecosystem of Africa might not see any notable signs of recovery this year. The curbed international investor appetite in the first quarter shows caution from the investors in deployed capital in the continent. Africa has already been home to a number of regulatory challenges over which ecosystem players have expressed concerns in the past. 2023 is expected to see a disruptive political climate owing to the state elections and disputed results coupled with an already dwindling economic climate. Moreover, the African central banks raising interest rates is likely to deter growth in the region. A report published by the Economic Times has made projections that despite the economic downturn, both North Africa and Sub-Saharan Africa are forecast to grow by 3.2% in 2023.

What’s In The Report?

The latest quarterly report offers strategic insights into Africa's performance. This report covers a 5-year analysis of Africa's venture funding evolution, with a specific focus on the country comparison and industry performance in 2023. You will get access to precious information such as:

Africa Venture Funding Evolution: Get a detailed analysis of the past five years, highlighting the growth and development of venture funding in Africa with a focus on the performance in 2023.

Key rankings such as the Top 20 investors, Top 20 funding rounds, Top 10 last exits, and 5-Year exit evolution of Africa.

Who is it for?

Whether you’re a private investor, a VC, an investment company, a CVC, or working in corporate, this report gives an overview of the ecosystem and caters to a diverse audience including any curious minds who want to use the yearly, quarterly and monthly charts in this report to track investment activity.

You can also see in which country and industry the investment activity focused in terms of deals and capital deployed, allowing you to leverage insights and make wise choices.

The report can also be used by consultants looking to identify technology innovation trends and who will find it valuable to look at the evolution of M&A activity and concentration of acquirers/acquired startups.

Last but not least, government entities searching for investment opportunities will also find valuable information to make informed decisions.

Where is this information from?

The report was 100% created using data from MAGNiTT. MAGNiTT is the leading VC verified data platform and offers a comprehensive directory of technology innovation trends. Our unique SaaS solution includes investment directories listing startup venture funding across the Middle East, Africa, Pakistan, and Turkey, and now Singapore. By using MAGNiTT, you will also get access to market sizing tools to visualize investment growth and trends across various industries, geographies, and stages, as well as comparison tools for benchmarking geographies, industries, and investor performance. Furthermore, MAGNiTT offers exit comparisons by examining mergers and acquisitions.

Learn more about MAGNiTT's Data Methodology.

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