The Plunge of African Tech Startup Funding: What’s Next?

African tech startup funding saw a significant decline in 2023, breaking a trend of growth since 2017. According to the African Tech Startups Funding Report, a total of 406 startups raised a combined total of $2.4 billion in funding, down 27.8% from the previous year. The number of funded ventures was down 35.9%. The decline in funding can be attributed to a shortage of capital, influenced by global factors such as the strength of the US dollar and high interest rates. The decline in funding has had a damaging effect on African tech startups, resulting in closures and scale-backs. The situation is expected to continue into 2024, as structural challenges and difficulties in finding capital persist. However, despite the challenges, there are some silver linings, such as better governance, diligence, and spend management. Longer-term investors need to remain committed and support startups during difficult times.