TLDR:
- American investment in African startups declined by 50% in 2023 to $4.5 billion due to economic headwinds.
- The number of deals dropped to 545 from a record 781, with North American investors responsible for half of the overall decline.
An article by Tech Labari highlights the significant decline in American investment in African startups in 2023. According to a survey, venture capital inflows to African technology and start-up firms dropped by 31% to $4.5 billion. This decline was attributed to economic challenges such as weak currencies and high inflation.
The report also mentioned that the number of deals decreased from 781 to 545, with North American investors accounting for 50% of the overall decline. The withdrawal of these investors overshadowed the retreats of European and Asia-Pacific investors.
Factors contributing to the decline included global liquidity issues, rising geopolitical conflicts, and challenging macro-economic conditions. Foreign investors pulled out of African economies facing high inflation and deteriorating local currencies. The article emphasized the need for indigenous capital allocators with a long-term commitment to the continent.
In terms of specific numbers, West Africa attracted the largest proportion of venture capital deal volume at 26%, driven by Nigeria as the most active country. The financial sector accounted for 23% of transactions, followed by information technology at 20% and consumer discretionary at 17%.
