African Startups Raise $156.2m Funding in October Amid Squeeze

By Adedapo Adesanya

There was a 24 per cent month-on-month increase in funding secured by African startups as total funding of $156.2 million was disclosed in October amid a global squeeze in funding.

According to Benjamin Dada Funding Tracker, this amount was obtained via 16 deals in the month under review, lower than the 19 deals executed in September 2023.

It was gathered that the funding was spread across many sectors, including artificial intelligence, healthtech, communication, logistics, e-commerce, edtech, cleantech. HRTech, and insurtech.

Of these sectors, the two deals executed in the cleantech startups accounted for approximately 74 per cent of the total funding in the month at $116 million, followed by the fintech sector at 16 per cent through two deals worth $25 million, while AI firms got $3.9 million.

Further, Healthtech saw a single deal worth $3.6 million, communication followed with $3 million, logistics with $1.8 million, and e-commerce with $1.5 million.

Two deals in the insuretech and edtech sectors each were calculated at $1.075 million and $400,000, respectively.

By country, Nigeria attracted the majority of funding at 65.9 per cent, primarily due to Husk Power’s $103 million funding round. It was the only one on record for the country. Others included South Africa, Egypt, and Cameroon.

Meanwhile, nine of the 16 disclosed deals fell within the early-stage category, comprising seed and pre-seed rounds. In contrast, the other seven deals belonged to the growth stage, encompassing pre-Series A, Series A, and Series D rounds.

African startups have borne the brunt of a global slowdown. In the first nine months of 2023, African startups raised only $1.3 billion, compared to $3.3 billion and $2.9 billion during the same period in 2022 and 2021, respectively.

In the third quarter of this year, Venture Capitalists (VCs) invested $300 million into African startups between July and September, making it the third consecutive quarter with a funding decline, according to startup funding tracker Africa: The Big Deal.

The funding crunch in Africa is a ripple effect of a global tech downturn characterized by mass layoffs, decreased investment levels, hiring freezes, and slashed valuations worldwide.

Nigerian startups were not exempt from this slowdown in funding as the Nigerian startups were only able to raise $470 million between July 2022 and June 2023. For context, Nigeria raised $2 billion between July 2021 and June 2022.