A RECENT report by Briter Bridges reveals that startups in Kenya have outpaced their counterparts across Africa in securing equity funding during the first half of 2023. The report sheds light on the investment landscape’s challenges and showcases notable statistics.
According to the data released by Briter Bridges, the startup ecosystem in Kenya has been thriving, securing a remarkable $520 million in equity funding, making it the top recipient in the continent. Following closely are Egypt with $510 million, South Africa with $400 million, and Rwanda with $280 million.
Surprisingly, Nigeria, with funding of $280 million, takes the fifth spot in terms of funding volume. Nonetheless, Nigeria stands as the leader on the continent with an impressive count of 101 deals, despite ranking lower in funding volume.
Kenya’s success can also be attributed to its robust deal count, closing over 80 deals in the first half of 2023. South Africa follows with over 60 deals, Ghana with more than 35 deals, and Egypt with over 15 deals during the same period.
However, the report highlights that the first half of 2023 has posed significant challenges for both startups and investors seeking funding. The total funding for startups across the continent has experienced a decline, amounting to $1bn in H1 2023. This marks a contrast from the $1.5bn in the second half of 2022 and the $1.8bn in the first half of 2022.
‘The volume of funding dropped by 26 percent from H2 2022 to H1 2023 and has largely been on a downward trend in 2023. The effect is that investors were shifting focus from growth-stage startups to late and early-stage ones,’ the report states.
The report further highlights the adverse effects of these challenges. Numerous startups have been compelled to cease operations, while funds have struggled to meet their target closures. This has led to write-downs on valuations and substantial workforce reductions for many companies.
As the first half of 2023 draws to a close, Africa’s startup ecosystem has crossed a significant milestone, surpassing $20bn in capital infusion over a span of 15 years. However, this accomplishment is shadowed by uncertainties about the future of investment in Africa’s innovation ecosystem.
‘This is indeed a landmark, but it comes at a time when many in the investment and innovation ecosystem are asking what the future of investing in Africa looks like,’ notes the publishers of the report, signalling a period of introspection and anticipation for the road ahead.