By Adedapo Adesanya
The African continent has recorded frequent acquisitions, with data showing that in the third quarter of the year alone, the continent witnessed 43 acquisition deals, showing signs of a maturing market.
A new report from a digital economy consultancy, TechCabal Insights, has revealed that in 2021, there were 32 acquisition deals on the continent.
The report titled The State of Tech in Africa Report, compiled by TechCabal Insights, also found that the average seed ticket size remained stable at $2.5 million in Q2 and $2.7 million in Q3.
After two years of continuous growth in VC investment, funding announcements have hit a peak. Startups have resorted to cutting costs to extending their runway, and acquisition deals have become necessary for survival, particularly with startups operating in the same market.
The number of acquisitions among startups operating in the same market increased from 31 per cent in Q2 to 52 per cent in Q3 2022.
It was found in the report that a new narrative has emerged in Africa in recent years, embodied by the exponential growth of funding for technology startups.
The report showed that investment in African startups grew 18x between 2015 and 2021 and 2x faster than global rates between 2020 and 2021.
However, beyond the funding stories, there are the quieter tales of exits. By the end of H1 2022, African-focused private capital investors had already made 22 full exits, representing about a 29 per cent increase compared to the 15 exits made in 2021 H1.
Commenting on the findings of the report, Mr Olanrewaju Odunowo, Head of TechCabal Insights, said, “When it comes to Africa’s evolving tech ecosystem, appropriate context and nuances must be taken into account. Data without context is imbalanced and misleading and can lead to the wrong outcomes.
“Beyond crunching the numbers, we have gathered robust insights drawn from primary interviews with leading industry experts. Our aim with this report is to present easy-to-digest insights and data points that anyone – from founders to investors – will find valuable. ”
Modupe Gbadeyanka