⛅ Waiting for brighter days (in Africa and elsewhere)

including an unconventional look at funding in Africa vs. India and France

Every quarter after CB Insights publish their State of Venture report (Q3’23 version available here), we compare funding trends in Africa - using our own numbers - to other regions’. So far the continent was not doing relatively as bad as its peers: while all other regions suffered a double-digit YoY drop in funding between 2021 and 2022, Africa resisted and even managed to grow slightly (+5%). In Q3’23, all regions recorded double-digit negative YoY growth, ranging from -39% in Asia-Pacific to -16% in North America, with Africa around the middle of the pack (-33% YoY). The only exception was Latin America where funding was flat YoY. If we compare Q3’23 funding to Q2’23, there was a -25% QoQ decline in Africa, while all other regions recorded a bit of a bounce (which was actually more of a leap in LatAm with +100% QoQ).

Of course, there is no good comparison as each geography is unique, and in any case comparison is the thief of joy as they say. But comparing Africa to LatAm doesn’t seem to be very fair if you consider Africa’s population is more than twice that of Latin America’s, while its total nominal GDP stands at less than half ($6-$6.5 vs. ~$3.1 trillion). There is simply no region with a population or GDP equivalent to Africa’s. With all the flaws that such a parallel involves - the main one being of course that Africa is NOT a country -, there are however markets with a population or nominal GDP equivalent to Africa’s: India and France respectively.

Without going into too much detail, we can see that Africa remains relatively underfunded compared to its demographic and economic potential: since 2019, $11.5 billion were invested in start-ups in Africa (equity only), compared to $42b in France (3.6x) and $81b in India (7x). What is encouraging is that Africa has overall been following the same trends as France and India (except for the Q3’23 bounce, which might just be delayed for the continent). If anything, there is less of a gap between India and Africa since the beginning of the funding winter (4.5:1 since Q3’22) than there was at the height of the funding heatwave (7:1 between Q1’22 and Q2’22).

We are hopeful the coming months will be bringing more positive news for the ecosystem, and we shouldn’t forget that despite the fact that the total amount raised isn’t picking up yet, deals are still being closed, great ventures built, and funds raised. MNT Halan’s $130m securitised bond issuance announced on November 2nd should also help a bit with the numbers. If you’re looking for a comprehensive list of $100k+ deals, you know where to look, right? And you also know that you’re eligible for a discount, eh?