Africa’s Startup Funding Sees Decline Amidst Global Trends: Experts Speak

Published 1 month ago
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According to the report by research firm Africa: The Big Deal, a total of $466 million was raised through $100,000+ deals by 121 startups, representing only half of the amount raised in Q1 2023.

The report found that equity remained the primary source of funding, comprising 71% of disclosed funding, while debt deals saw a significant decrease, constituting 28%.

One standout from the quarter was Nigerian mobility startup Moove, which secured $110 million, influencing funding trends across the continent. However, the majority of funding continued to flow to startups headquartered in the Big Four countries, with Nigeria and Kenya leading the pack.


In reaction to the report, stakeholders offer insights and recommendations for navigating the current funding landscape.

Oyin Solebo, Managing Director at ARM Labs Lagos Techstars Accelerator, tells FORBES AFRICA: “It appears as if we are experiencing not just an African, but a global reset in VC funding levels.”

Solebo continues: “For the coming quarters, with global inflation and interest rates still at record highs, we should expect similar declines in African startup funding versus the previous year’s equivalent quarter, as other asset classes will remain more attractive to more risk-averse investors. But there is light at the end of the tunnel. In the last few quarters, a number of notable VCs have announced new funds, meaning that there is more institutional money ready to be deployed in strong African deals.”

Solebo highlights the need for startups to focus on generating revenue and strengthening financial management amidst the decline in VC funding.


“We need more local capital to be deployed into our ecosystem. The continent remains heavily reliant on international investment – with around 70% of our funding coming from overseas,” says Solebo.

Maurizio Caio, Managing Partner at Africa-focused tech VC firm, TLcom, emphasizes the importance of evidence of traction for startups to secure funding.

“In the upcoming quarters, the funding landscape will heavily depend on the state of global macroeconomic conditions, deal flow quality on the continent, and possible evidence of successful exits of African VC-backed companies, which we project will improve during the rest of the year,” Caio shares with FORBES AFRICA.

Emmanuel Adegboye, head of Africa-focused pre-seed investment program, Madica, says: “The good news is that there are indications that there’s still a lot of early-stage investing activity on the continent with investors like Madica continuing to actively invest, just not a lot of large later-stage deals.


“I don’t expect a lot of drastic improvements over the next few quarters and it’s especially important for startup founders to continue to be prudent with managing cash flow and their expectations to close later fundraising rounds quickly. It might be important to add that while the pace in investments has been slower, this shift can ultimately lead to more informed, sustainable investments that would benefit both startups and investors in the upcoming quarters/long run,” says Adegboye to FORBES AFRICA.

Ifelade Ayodele, CEO and founder of fintech firm, Blaaiz, explains the multi-faceted implications of the report for emerging startups, stressing the need for flexibility, customer-centricity, and strategic thinking regarding exit options for investors.

“Specific industries may have begun to be less attractive for investors due to a combination of factors such as spending power of end users (heightened by inflation), alternatives, among others,” Ayodele notes to FORBES AFRICA.

Ayodele suggests that “emerging and potential startups may need to begin to rethink the purchasing power of end users and make necessary pivots”.


Ayodele urges startups to focus on solving actual problems “as opposed to perceived problems”, and think globally while acting locally.

“Startups may consider products that may thrive in at least two or more African markets duly backed by technology for scale and adoption,” Ayodele says to FORBES AFRICA.