African startups weather VC funding downturn

With $1.1bn raised in the first half of 2023, Africa’s startup ecosystem shows resilience in the face of the global venture capital funding downturn.


Image : Ruben / Adobe Stock

Despite venture capital (VC) funding slowly retreating from the African market this year, the continent’s startup ecosystem continues to perform well compared with more mature markets, according to figures from PitchBook, a capital market company.

In 2022, Pitchbook recorded $2.9bn invested across 689 venture rounds in Africa, making it the only region with a year-on-year increase in both deal value and count.

However, in Q1 2023, VC-backed African companies completed only 91 deals, worth $419m, a big drop on the 257 rounds totalling $948m in the same period last year.

Nevertheless, while the number of deals stood at pre-2020 levels in Q2, the capital raised climbed to bring the total to $1.1bn in the first six months of the year.

“Investors in the region were already anticipating a more muted dealmaking environment this year, with foreign investment in the continent expected to retreat to core markets. But while it has seen a slowdown, Africa is weathering the storm better than more mature markets,” writes Leah Hodgson, a senior analyst at PitchBook, on the company’s blog.

Nigeria, Kenya, and South Africa accounted for more than half (127) of all deals closed by startups in Africa during Q1 and Q2 of 2023.

Additional research by Charles Dietz

More startup news from across Africa

HR Berlin-based startup Propel secures $2.7m in seed investment

Who? Propel is a human resources startup founded by Nigerian entrepreneurs Sunkanmi Ola, Seun Owolabi, and Abel Agoi in 2020. It provides companies with access to tech talent from its ecosystem of tech communities across Africa and the world. It has offices in Germany, Nigeria, and Portugal and already counts big multinationals such as Orange and Mercedes-Benz as clients.

How much? Propel raised $2.7m in a seed funding round led by Dutch venture capital firm No Such Ventures. Prior to this, Propel had received a €50,000 (approximately $55,000) pre-seed funding from Berlin-based VC APX in 2020 and a $100,000 grant from Google in 2022.

Why does it matter? This funding comes at a time when Swedish multinational networking company Ericsson released a report showing that 56% of employees in five key African markets – South Africa, Nigeria, Kenya, Egypt, and Morocco—consider flexible work hours or locations essential. Propel’s business model aligns with this trend and encourages a “reverse brain drain”, which could have a positive effect on economies in Africa.

Egypt’s Islamic FinTech startup Agel closes a pre-seed round for an undisclosed seven-figure amount

Who? Agel is a fintech company that sells customised, digital, cashless, and Sharia-compliant financing products, including Murabaha, a cost-plus financing model that adheres to Islamic principles. They cater to Micro, Small, and Medium Enterprises in Egypt. Agel was established in October 2021 by Abdelrahman Saeed and Ahmed El Sherbiny.

How much? The press release states an “undisclosed seven-figure amount,” indicating at least $1m. The investment round was led by MENA-focused venture capital firms: Plus Venture Capital (+VC), Seedstars International Ventures, and Flat6labs, with participation from SEEDRA Ventures, Banque Misr Acceleration Program, and other angel investors.

Why does it matter? Agel is Egypt’s first and only Islamic fintech company. The country lags behind other Muslim-majority countries with larger Islamic FinTech markets, such as Saudi Arabia ($17.9bn), Iran ($9.2bn), and the United Arab Emirates ($3.7m). According to the Global Islamic Fintech Report, the Islamic FinTech market is projected to grow at a 21% CAGR to reach $128bn by 2025.

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Leo Komminoth

Leo is tech reporter for African Business, based in Dakar, and also works on data visualisations.