By Jonathan Ntege Lubwama
- African startups achieved record funding in 2022, defying global trends and raising between $4.8B and $6.5B
- The African startup ecosystem is poised for continued growth, with opportunities for local investors, and a rising focus on debt financing
African startups defied the global venture funding decline and raised record funding last year. Despite facing challenges in the second half of the year, Africa experienced growth in terms of total funding raised, number of deals, and the number of investors involved. Partech reported African startups $6.5 billion in funding across 764 rounds, with equity deals accounting for $4.9 billion.
Why This Matters: Africa has been referred to as the last frontier, and the record funding raised by African startups in 2022 is significant for several reasons. It showcases the resilience and growth potential of Africa’s tech ecosystem, even in the face of global market challenges. Africa’s ability to attract investment and maintain growth positions it as an attractive destination for both local and international investors.
Three data trackers, Briter Bridges, Partech, and The Big Deal, provided insights into the funding landscape. According to Briter Bridges, African startups raised an estimated $5.4 billion in total funding across over 975 deals in 2022, compared to $5.2 billion across over 790 deals in the previous year. The Big Deal found that African startups raised $4.8 billion across 1,000 deals, a significant increase from $4.33 billion across 820 rounds in 2021.
Increased funding enables entrepreneurs to overcome funding gaps and access capital for research and development, talent acquisition, along with expansion into new markets. They are solving problems through fintechs that are bringing financial inclusion across Africa. Additionally, the success of African startups in raising funding contributes to changing perceptions about the continent’s potential and fosters a positive investment climate.
What’s Next: Looking ahead, the African startup ecosystem is poised for continued growth and further capital infusion. The funding landscape may witness a shift towards more local early-stage investors, as opportunities emerge for them to participate in better deals. Startups are increasingly embracing debt financing as a driving asset class, offering an alternative to traditional equity funding. The growing impact of debt in the African tech ecosystem presents new avenues for startups to access capital and sustain their growth.
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