Analyzing Africa’s October Startup Funding

Analyzing Africa’s October Startup Funding

If there was an emoji to describe the African tech funding scene in recent times, it should look like this: (ಠ_ಠ). You should probably look that symbol up online; it looks better there. Venture funding has sunk to new lows over the months; also visible in October startup funding, bringing the realization that no one has been spared from the global financial crisis.

In August, global venture funding fell to $25.2 billion, per Crunchbase, less than half of the $53 billion invested in August 2021. It was also the lowest monthly venture-funding total in two years, 10% from the previous month. This poor performance was also reflected in Africa’s tech funding. August brought the lowest funding announcements of the year so far for African startups. African businesses raised $218,000,000 in 38 fully reported rounds in August 2022. That was a 9.06% decline from July’s $239,706,000—the least that African companies have ever raised in a single month.

African startups raised $383,465,000 in 36 fully announced rounds in September 2022. This sum, which represents a 75.9% increase over August’s $218,000,000, represents the most money that African startups have so far raised in a single month since June 2022. Per Crunchbase, venture funding for the third quarter of 2022 totaled $81 billion, down by $90 billion (53%) year over year and by $40 billion (33%) quarter over quarter.

October has not gone unnoticed. Startup funding sunk again, hitting a new low.

October Startup Funding

September saw a couple of $1 billion rounds lead the way. However, Crunchbase noted that the rounds were smaller in October, as cleantech and energy saw big raises but not at the billion-dollar level. Specifically, African startups made 32 fully disclosed raises totalling $186,460,000 in October. This total is the lowest amount raised in a month by African startups in 2022, a 51.4% reduction from September’s $383,465,000.

Egypt’s B2B E-commerce, MaXAB raised $40m in series b, the highest disclosed funding in October. Nigeria, Egypt, South Africa and Kenya continue to dominate their respective region. In the past fundraisers, Fintech has dominated the scene, however, the month of October startup funding saw Proptech startups getting more funds.

Per region, North Africa takes the lead with $113.6 million of the funding, followed closely by West Africa with $46.2 million, East Africa with $21.3 million, and South Africa with $5.3 million in disclosed funding.

Monthly global venture funding has been trending down since it hit a record high of $69.4 billion last November. While it took some months to see the effect on the shores of Africa, the last few months have been telling. Africa’s August funding accounted for just 0.86% of the total VC funding.

According to the report, startups in Africa raised a total of $367 million in Q3 2022. The sum represents over 50% decline when compared to the $804 million raised in Q2 2022. Also, this accounted for 0.45% of total global funding in Q3 2022. At these rates of decline, the $7B goal for 2022 seems almost impossible.