2023-05-08 03:21:00
(Ecofin Agency) – While macroeconomic uncertainties weigh on investors’ ability to plan for the medium and long term, the cooling of the private equity market is increasingly felt on the continent. This scarcity of funding is pushing several start-ups to cut their workforce.
Fundraising by African start-ups in the first quarter of 2023 totaled $859.9 million, down 42.8% from the same period of 2022, according to a report published on May 5 by digital economy consultancy TechCabal Insights.
Entitled « The State of Tech in Africa : A Q1 2023 Report », the report states that the scarcity of funding has prompted several start-ups to make cuts in their workforce in an attempt to improve their profitability or extend their lifespan.
In total, tech nuggets operating in Africa laid off 481 employees, almost half of the layoffs recorded in the whole of 2022. The largest workforce reduction was carried out by the Nigerian start-up e-commerce Alerzo, which parted ways with 400 employees after two previous rounds of layoffs dating from August and September 2022.
Fundraising by African start-ups in the first quarter of 2023 totaled $859.9 million.
The report also indicates that the total number of transactions recorded over the first three months of the current year was 138 deals, against 102 during the same period of the previous year.
The number of debt financing transactions (Venture debt) reached 11 transactions between 1is January and March 31, 2023, compared to only 6 during the corresponding period of 2022.
Only two mega-towers were recorded in the first quarter of the current year compared to 4 during the same period of 2022. These are those carried out by the Egyptian fintech MNT-Halan (400 million dollars) and the start- South African Planet42 mobility up (100 million).
The ranking of start-ups having raised the most funds by country of origin shows that Egypt ranks first with 434.2 million dollars ahead of South Africa (244.7 million), Nigeria (61 .1 million), Kenya (44.2 million). These four countries nicknamed the “Big four” thus represent more than 91% of the total fundraising carried out by all the young shoots on the continent in the first quarter of 2023.
Fintech monopolizes 69% of financing
The sectoral breakdown of this funding also reveals that financial technology (fintech) companies remain the best-funded tech nuggets on the continent with $590 million, or nearly 69% of total fundraising recorded. over the first three months of the current year. This amount represents an increase of 130% compared to that reached in the first quarter of 2022.
This is followed by start-ups operating in the sectors of health (64.2 million), energy (47.4 million), telecommunications, media and entertainment (38.6 million) and transport. & logistics (24.9 million).
Sectors that captured funding of less than $15 million in the first three months of 2022 were waste management, hospitality, and education & employment.
The report also reveals that 8 acquisitions were recorded on the African tech scene in the first quarter of the current year against 14 during the same period of the past year. The most important acquisition operation concerned the takeover of InstaDeep, a Tunisian start-up specialized in artificial intelligence, by the German biotechnology laboratory BioNTech in the context of a transaction valued at 682 million dollars.
On another level, TechCabal Insights listed four cases of geographic expansion in the first quarter of 2023 compared to 8 in the same quarter of 2022, including those of the Nigerian mobility start-up Treepz which planted its flag in Kenya, and the a young South African company operating in the hotel management sector RoomRaccoon, which has established itself in Tanzania.
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