In 2023, the influx of international funds into Nigerian startups experienced a steep decline of 65.83%, plummeting to $410m from the previous year’s record of $1.2bn in 2022. Kenya’s emergence as the leading destination for total startup investments on the continent resulted in the country taking over the top spot, while the decline in investments caused the previous leader to surrender its position. A research was conducted by ‘Africa: The Big Deal’ – a renowned research firm.
Kenyan startups outshined their counterparts in Nigeria in 2023, securing the first position in African startup funding. In total, Kenyan startups successfully raised just under $800m, showcasing their impressive growth and potential. Meanwhile, Nigeria could only manage to secure the fourth spot, as they were surpassed by Egypt, South Africa, and Kenya in terms of funding. This analysis exclusively considered startup funding of $100k and above, giving a comprehensive overview of the entrepreneurial landscape in Africa.
The decline in Western African funding was evident.
2023 saw the persistent dominance of the Big Four, as they managed to attract a whopping 87 percent of the total funding for startups across the continent. This marked their largest share since 2019, showcasing their unwavering power and influence. Out of the 500 startups, it was interesting to note that Kenya, Egypt, South Africa, and Nigeria collectively housed 71 percent, with a total of 357 emerging from these four countries. The firm made a statement about the decline, expressing how Nigeria experienced a significant transformation in 2023.
Despite the country having the highest number of start-ups that secured $100k or more (146, accounting for 29 percent of the continent), the funds they raised decreased by a third each year (a drop of 67 percent). In 2023, they managed to raise $410m, whereas in 2022 they raised $1.2bn, and in 2021, they obtained $1.7bn. The decline in Western African funding was evident as it dwindled to 68 percent, marking a significant drop from its previous shares of 85 percent in 2021 and 77 percent in 2022.
South Africa dominates regional funding with a staggering 97% share.
Surpassing all other major markets, this regional share is currently at its lowest point since the commencement of data collection in 2019. In 2023, although Kenya experienced a decrease of 25% compared to the previous year, it remarkably managed to secure nearly $800m in funding. This amount accounted for 28% of the total funding raised in the entire continent, making Kenya the most successful in attracting investments. On the other hand, Egypt witnessed the lowest number of ventures among the prominent Big Four.
Egypt had only 48 raising a mere $100k in funding during the same year. However, due to the overall decline in funding for Kenya and Nigeria, Egypt took the second position on the continent by raising an impressive $640m. According to the company’s statement, South Africa continues to dominate regional funding with a staggering 97% share. Out of the 70 start-ups in the country that secured funding exceeding $100k, their cumulative funding reached an impressive $600m.
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This cumulative funding was equivalent to 21% of the entire continent’s funding. Interestingly, South Africa stands out amongst the Big Four as the only country that did not experience a decline in its total funding, showing a growth of 8% year on year between 2022 and 2023. In the year 2023, there was a notable drop of 39 percent in the total amount of funding directed towards African startups, resulting in a sum of $2.9 billion.
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