Africa: Financing of African start-ups by venture capital with more than $100,000 raised reached $850 million in the 3rd quarter of 2022

According to the Africa the Big Deal platform, venture capital funding for African start-ups with more than $100,000 raised reached $850 million in the three-month period ending September 30, 2022. This is the first times that the threshold of $ 1 billion has not been reached for four quarters, can we see with the analysts of the platform.

The year 2022 got off to a good start, however, with mobilizations in records and on the rise during the months of February ($638 million; +258% compared to the same period in 2021) and March ($738 million; +117% in year-on-year). Admittedly, the months of July are often quiet periods for fundraising, but for African start-ups, there has been a 20% drop in resources mobilized in July 2021 and 2022, and a 67% drop in the months August of the same period.

Data collected by the Ecofin Agency and available on its professional platform suggests that only $391 million of transactions over $100,000 were raised during the month of September 2022. This is a 53% underperformance. compared to the $823 million recorded over the same period in 2021.

It is still early to define the reasons for this drop in investment in African start-ups. Analyzes of specialized firms such as Endeavor indicate, however, that they are carriers of growth niches, in particular all those involved in the digitalization of payment services. We also note that the continent is unable to completely renew its investor base. Players like Launch Africa or Y Combinator continue to dominate the space.

In a blog published on its website in June 2022, the African Venture Capital and Private Equity Association (AVCA) urged investors not to be swayed by downward trends in the global start-up investing market. -up. She recalled that unlike stock markets, start-ups in Africa still make it possible to invest in concrete projects that combine impact and returns.