In a shift from the regular investment development within Africa’s burgeoning startup sphere, Kenya surpassed Nigeria as the primary recipient of startup funding in 2023, securing an impressive $800 million, as revealed by a comprehensive analysis conducted by research firm ‘Africa: The Big Deal.’
The report’s insights shed light on a shift in funding dynamics across the continent, highlighting shifts in investment dynamics and geographical trends.
“Nigeria, previously at the helm in 2021 and 2022, witnessed a remarkable downturn, sliding to the fourth position with a modest $410 million raised in 2023,” stated ‘Africa: The Big Deal,’ noting the nation’s stark decline from a staggering $1.7 billion in 2021.
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Highlighting Nigeria’s dramatic transformation, the report noted, “While Nigeria retained the highest number of startups raising $100k or more (146, accounting for 29% of the continent), the total amount raised plummeted to $410 million from $1.2 billion in 2022 and $1.7 billion in 2021.”
It added, “As a result, its share of Western African funding continued to drop to reach 68%, down from 85% in 2021, and 77% in 2022. This is the lowest regional share of any Big Four market since we started collecting the data in 2019.”
The dominance of what the report categorizes as ‘The Big Four’ – Nigeria, Kenya, Egypt, and South Africa – persisted, capturing a significant 87% share of all startup funding across Africa in 2023, the highest concentration since 2019.
Despite a 25% decline in funding, Kenya emerged as the frontrunner, securing the largest investment share (28%) of the continent’s total, with 93 startups raising $100k or more, constituting 19% of Africa’s aggregate funding.
Egypt, with 48 startups securing $100k or more, claimed the second spot among the Big Four, experiencing a moderate decline (-20%) compared to Kenya and Nigeria. Notably, Egypt’s share of North African funding surged to an impressive 95% in 2023, marking substantial growth from 72% in 2022.
“But thanks to a YoY decline (-20%) more moderate than Kenya and most importantly Nigeria, it was enough for the country to claim the second spot. Egypt’s share of North African funding grew substantially from 72% in 2022 to 95% in 2023 (+23pp, by far the strongest progression), due both to the magnitude of MNT-Halan’s fundraising, and Algeria and Tunisia’s inability to repeat their strong 2022 performance,” the report stated.
Maintaining its position as the highest recipient of regional funding at 97%, South Africa stood out, with 70 startups raising $100k or more, accumulating $600 million, comprising 21% of the continent’s total. Impressively, South Africa defied the trend with an 8% year-over-year increase in total funding, distinguishing itself from the declining trends in the other Big Four nations.
The report underlined how these transformative shifts redefined Africa’s investment ecosystem, signaling a notable alteration in the geographical distribution of startup funding, with Kenya’s ascension as a significant focal point.
Overall, the findings noted the evolving nature of Africa’s startup ecosystem, reflecting the fluidity of investment patterns and the emergence of new frontiers for entrepreneurial growth.
Analyst at ‘Africa: The Big Deal’ said this shift not only marks a turning point in funding dynamics but also signifies the evolution and maturation of Africa’s startup ecosystem, opening doors to new opportunities and challenges.