Africa’s venture-capital market shrunk by whooping 40% in 2023, as startups struggle

The African venture-capital (VC) market witnessed a 40% drop in funding from the previous year in the first six months of 2023, reflecting cautious investor sentiment and sparking concerns for startups’ future.

In the first half of 2023, a mere 263 VC deals were executed, collectively accounting for $2.1 billion, which represents a 40% decline in deal volume and total funding compared to $3.5 billion during the same period last year, according to a report released by the African Private Capital Association (APCA). The abrupt drop in VC funding underscores a challenging period for African startups. This decline has sent shockwaves through the continent’s startup ecosystem, raising concerns about the future of entrepreneurship and innovation in the region.

The report, titled “Shifting Ventures: Africa’s VC Landscape,” unveils the magnitude of this funding crisis and its implications for the entrepreneurial landscape. The APCA report suggests that global investors are displaying a newfound caution when it comes to funding African startups, with fewer high-ticket investments materializing. Only five large-scale deals were concluded, accumulating just over $1 billion. This sharp drop from the previous year’s nine deals, which garnered $1.3 billion, signals a shift in investment sentiment. The APCA report lists a number of factors that led to this decline in venture capital investment in Africa, namely lack of funding; lack of infrastructure, and regulatory hurdles.