According to recent research, venture capital inflows into African tech companies and startups decreased 31% in 2023 to 4.5 billion dollars as economic adversities, including weak currencies and high inflation.
Driving The News
The number of deals, coming in as both equity and debt, dropped to 545 from a record 781 in 2022, with the number of active investors in the region falling by a third, London-based Africans Private Equity Association she said in her report.
The big picture
A drop in global liquidity, increasing geopolitical conflictsand challenging macroeconomics The conditions prompted investors to spread assets across geographies to limit risks. Foreign investors have fled African economies struggling with high inflation and the erosion of the value of local currencies.
What they say
“Those who made opportunistic rather than dedicated investments in Africa left for more familiar shores,” said AVCA, whose members include private equity, venture capital, institutional investors and development finance institutions.
There is a “need for domestic capital allocators with a long-term commitment to the continent.”
“The departure of North American investors accounted for 50% of the total decline in the number of investors in 2023, significantly overshadowing the declines of European and Asia Pacific investors, which accounted for 18% and 9% of the decline“, the club said.
By The Numbers
West Africa attracted the largest percentage Venture capital deal volume in Africa at 26%is driven by Nigeriawhich was the most active country volume at 19%, the survey said. The financial sector represented 23% of transactions, with computer science getting 20% and consumer discretionary 17%he said.
Source: Bloomberg
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