Total funding into the African startup scene fell by 37 per cent year-on-year to $4.1bn in June 2023, data from Africa: The Big Deal has shown.

The data obtained from the database on the African start-up ecosystem indicated that funding declined to $4.1bn in June 2023 from $6.5bn in the corresponding period of last year.

It also indicated that every index fell in the ecosystem with funding raised through equity deals falling to $2.1bn (through 560 deals) from $5.6bn (through 860 deals) in June 2022.

Also, the number of unique investors fell to 800 from 1,100 in the prior period.

The data insight firm noted that the funding winter — characterised by a y-o-y decline in funding raised by local start-ups — first began in the US and China in Q1 2022, before spreading to all continents except Africa in Q2.

It said that by Q3, it had put down roots everywhere and it is now a year since Africa slid into the funding winter.

It said, “But before we compare the change of season between the past twelve months (July’22-June’23) and the previous period, it is worth noting that July’21-June’22 was in fact a heatwave: it was the consecutive 12-month period during which the ecosystem in Africa experienced the highest levels of funding activity both in total amount raised ($6.5bn) and total number of equity deals (860). It makes the funding winter all the more frosty.”

The firm explained that despite this, the proportion of equity funding being deployed in the Big Four (Nigeria, South Africa, Kenya, and Egypt) was stable y-o-y at 81 per cent.

It added, “This doesn’t mean some markets weren’t hit harder than others. Fintech continued to be the sector attracting the most equity funding, though its lead eroded by 10 percentage points from 53 per cent to 43 per cent.

“This can largely be attributed to the fact that there were no less than 7 fintech mega deals ($100m+) during the heatwave, versus only one in the past 12 months (MTN-Halan in February 2023).”

Male-funded startups continue to dominate the African startup scene, with 84 per cent of funding raised during the period getting deployed to exclusively male-funded start-ups. Female startups only got crumbs, with female Chief Executive Officers getting seven per cent of funding.

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