Home Market Spotlight As global VC market slows, Africa charts its own course – TechCrunch

As global VC market slows, Africa charts its own course – TechCrunch

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As global VC market slows, Africa charts its own course – TechCrunch


Although the African adventure Capitalization held steady in the first quarter, with some investors and tech stakeholders arguing that the continent still has a good chance of slowing along with the rest of the world.

Experts told TechCrunch that the recently announced deal comes months before macroeconomic challenges — high interest rates, war, inflation — hit the global venture capital landscape. This means that there is a lag in reporting on the status of venture capital on the African continent. As a result, with start-up capital dwindling in the U.S. and Europe, it is widely believed that the recession will soon start affecting developing markets—especially Africa.

“The moment of truth will be the end of summer,” Max Cuvellier, co-founder of The Big Deal, told TechCrunch. “August [and] Especially September, because that’s when we saw the boom last year. “

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Last year, African startups received more than $1 billion in funding in two months. Anything lower than that would result in a year-over-year decline, Cuvellier noted.

Stephen Deng, co-founder and partner of DFS Lab, added that those investors who inflated the valuations of late-stage U.S. companies were also those who flagged African companies.

“I don’t understand why, in the context of Africa, this trend doesn’t end up affecting the continent, and we’re going to see a slowdown,” Deng told TechCrunch. “One of the better things is that we’re still seeing an increase in funding, but at a different percentage year-over-year.”

“If these global funds pull out and do less, it also means there is more room for local funds to participate in expansions or their pre-Series A rounds.” Aaron Fu, co-founder of Sherpa Ventures

Big players such as Tiger Global and SoftBank have already been hit in developed markets. Local investors told TechCrunch that big companies that are also devoting some of their money to African startups could slow down their investment pace on the continent.

Funding figures show that about $2.7 billion has flowed into African ecosystems in the first half of this year. That’s more than double what the continent raised this time last year. In 2021, Africa spawned five unicorns while raising $5 billion in venture capital funding: Flutterwave, Chipper Cash, OPay, Wave, and Andela.

So far, no unicorns have been created in the first half of 2022. Given the four unicorns announced in the second half of 2021, this may be overlooked by stakeholders, but it would be naive to predict the same for the rest of the year; we are in a completely different market.

But some experts say Africa may not see a sharp decline if big Africa-focused companies continue to cut spending.

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