The African start-up ecosystem experienced a difficult year in 2023, marked by a significant drop in active investors in the technology sector. According to a report titled “African Tech Venture Capital 2023,” the continent recorded a 50% decrease in the number of investors, with 569 of them withdrawing from the start-up market.
In terms of financing, venture capital investments in Africa have also seen a significant slowdown. In 2023, only 547 transactions were completed, for a total amount of $3.5 billion. This represents a decrease of 46% compared to the previous year. Additionally, the report states that the number of transactions also decreased by 28%, marking a first in 8 years.
The economic crisis that hit in 2023 was the main factor discouraging investors. With a 50% drop in the number of equity investors and a 52% drop in the number of debt investors, African start-ups find themselves with fewer opportunities to obtain financing.
The report also highlights a significant decline in equity financing in Africa over the past two years. In 2022, equity funding was $4.9 billion, but it dropped to $2.3 billion in 2023, a 54% decline. Debt financing saw a less significant, but nonetheless present, decline.
This decrease in investors in the African market leaves a void for start-ups looking to expand. This highlights the importance of creating a favorable environment for investment and encouraging entrepreneurial initiatives in Africa.
It is important to note that this situation is not specific to Africa, but is part of the challenges that the global venture capital ecosystem faced in 2023. Global equity funding saw a 38% decline. compared to the previous year, while subprime debt saw a more modest decline of 5%.
Despite these challenges, there remain opportunities for African start-ups. It is essential to continue to promote entrepreneurship and innovation by providing adequate financial support and creating an environment conducive to economic and technological growth.
In conclusion, the decline in investors in the African start-up ecosystem in 2023 has impacted the funding available for young companies. However, it is important to remain optimistic and continue to support the development of start-ups in Africa. With the right support and opportunities, these companies can play a key role in the economic growth and technological transformation of the continent.