In the first half of 2023, venture capital (VC) funding for African tech startups experienced a significant decline of 54%, according to data from research firm MAGNiTT. VC firms invested $951 million during this period, with 214 completed deals, marking a 50% decrease compared to H1 2022. The number of exits remained low, with only 15 exits recorded so far in 2023.

Despite the downturn, fintech startups continued to attract the most funding, accounting for 29% of the total investments. Ecommerce and transport/logistics startups followed, receiving 12% and 11% of the funding, respectively.

Nigeria led in terms of deal volume, followed by Kenya and South Africa. In terms of deal value, Egypt topped the list, largely due to the $260 million MNT Halan deal in February. South Africa saw a slight reduction in deal value, while Nigeria remained prominent.

Accelerators, rather than VCs, were responsible for a significant portion of investments in the first half of the year. They accounted for five of the top ten investments, with ARM Labs Lagos, Catalyst Fund, The Baobab Network, and Norrsken Global being the most active accelerators.

In terms of investment value, the top ten investors were all international, including Chimera Capital, Tencent, Blue Earth Capital, Sumitomo Corporation, and Apis Partners. As for exits, the 15 recorded so far in 2023 represent 25% of the total exits in 2022, with Kenya leading with four exits.

Amid the ongoing VC funding crunch, investors have shown a focus on early-stage startups, with 57% of investments going to such companies. This marks a 5% increase compared to 2022.

Overall, the data reflects a decline in VC funding for African tech startups in the first half of 2023, with fintech remaining an attractive sector and a shift towards early-stage investments.

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