The African tech ecosystem has experienced a continual decrease in venture capital funding this year, with the decline linked to the global downturn in funding. This has consequently resulted in a rise in startup closures, employee layoffs, and valuation cuts.
This has led several analysts to question the existence of any unicorns on the continent. “Unicorn is a tall dream right now. We are more focused on profitability and staying alive,” says Collins Iheagwara, co-founder and CEO of Simpu.
With the decrease in traditional venture capital, several startups are exploring alternative funding sources, while others have managed to secure funds through conventional means.
In November 2023, a sum of $89.6 million was raised by African startups through 17 announced deals, including four undisclosed ones. Per BD Funding Tracker, this represents a 42.63% decrease compared to the previous month’s fundraising total of $156.2 million. Additionally, it reflects a significant 68.93% year-on-year decline from the $288.5 million raised in the same month last year across 19 deals.
What's inside?
- Sector analysis of VC funding raised in November
- Last month's key top funding destinations
- Top five disclosed funding in November 2023
- A list of VC funds that were launched last month
Even though the fintech and e-commerce sectors achieved the highest number of deals, with four each, the connectivity sector claimed the top position in funding amount during the period under review. CSquared's $25 million fundraising notably positioned the connectivity sector as the most funded based on deal value.
In the same period, insurtech startups, with two deals, raised $22.8 million, securing the second-highest funding. Following closely, fintech attracted $18.4 million, mobility received $11.4 million, and one deal brought cleantech into the list of the five most funded sectors in November 2023. Other sectors that secured funding last month include HRTech, healthtech, agritech, and edtech.
The cleantech sector remains consistently among the most funded sectors throughout this year, and it even took the lead in sector performance last month. In contrast, funding in the fintech sector has experienced a decline when compared to previous years.
Apart from Egypt, which reported three undisclosed deals last month, the other members of the Big Four have maintained their position as the primary destinations for venture capital funding on the continent. Leading the group this time, South Africa secured 40.98% ($36.7 million) of the total funding raised in November, followed by Uganda with $25 million, Nigeria obtained $18.3 million across three deals, and Kenya secured $5.7 million across two deals.
Funding also went to other markets like Tunisia, Morocco, and Cameroon.
"In uncertain times, investors will seek to de-risk an already risky investment by concentrating capital in markets where the revenue opportunity is exponentially large," explains Peter Oriaifo, Principal at Oui Capital. According to him, this rationale is the driving force behind the further concentration of capital in the prominent big four markets—Egypt, Kenya, South Africa, and Nigeria.
Hence, we excluded the 23 African startups that were selected for the inaugural cohort of the Visa Africa Fintech Accelerator.
Top five disclosed funding in November 2023
The $25 million funding raised by CSquared played a crucial role in positioning Uganda as one of the top VC funding destinations for last month. This indicates that the top five funding deals significantly influenced funding trends in their respective primary markets or sectors.
While most of the deals are growth-stage rounds, the final two constitute seed-stage investments.
- CSquared, a pan-African connectivity startup, secured $25 million in an equity funding round, with investment from the Convergence Partners Digital Infrastructure Fund, International Finance Corporation, and the International Development Association.
- In South Africa, insurtech startup Pineapple closed a $21.3 million Series B round led by Futuregrowth, Talent10, and MIC.
- GoMetro, a South African mobility startup, raised $11.4 million in a Series A funding round led by Zenobē Energy.
- Meanwhile, Nigerian fintech startup FrontEdge closed a $10 million seed round.
- Shekel Mobility, a Nigerian B2B trading platform serving car dealers in Africa, secured a $7 million seed round led by Ventures Platform and MaC VC.
Also Read: We tracked about 26 African tech acquisitions in 2023
A list of the VC funds that were launched in November 2023
Last month saw the launch of at least five African-focused VC funds. Explore the details below:
- Pan-African venture capital firm, Norrsken22 closed its $205 million Africa Tech Growth Fund to back fintech, edtech and healthtech startups.
- EchoVC launched a $2.5 million fund in partnership with Shell Foundation and UK Aid, to invest in cleantech startups.
- Abuja-based VC firm, Aduna Capital announced the launch of a $20 million fund to invest in African tech startups, especially in Northern Nigeria.
- Saviu Ventures, a leading VC firm in Francophone Africa, reached the first close of its second fund Saviu II, backed by private investors and family offices, to continue investing in the region’s tech ecosystem.
- BluePeak Private Capital, a private capital firm, closed its flagship fund at $156 million to support scalable businesses in Africa.
