Small, but Mighty, but Small, but Mighty...
Comparing Africa's funding trends to other regions'
Let’s face it: Africa’s contribution to global funding volumes remains minimal at less than 1%, below the continent’s share of global GDP (~3%) and well below its share of global population (~17%). Despite hopes in Q1 that the continent could be taking over Latin America, this didn’t last and Africa is back at the bottom of the rankings in Q2, and H1 overall.
If we’re looking for a silver lining, we need to focus on how the funding evolved since 2020. Globally, things have been going downhill since the beginning of 2022, to a point that the funding levels we’ve seen globally in H1 2023 ($126bn) have pretty much fallen back to their pre-craze levels of early 2020 ($119bn in H1 2020). Two regions have dipped even further: LatAm (-30%, H1 2023 vs. H1 2020) and APAC (-20%), while others are doing slightly better: Europe (+30%) and the US (+13%). But no region is ‘holding up’ as well as Africa where funding levels in H1 2023 still track at more than double what they were in H1 2020.
And that’s when the argument starts going on a loop: — Africa’s share of global funding is pretty much negligible. — Yes, but it’s growing much faster than any other region. — OK, but it’s so far behind. — I know, but it could eventually catch up. — Hmmm, at this rate, in a million years. — Maybe, but you need to start somewhere… 🥱
While it won’t settle the argument, I will leave you with this one last piece of data: in H1 2020, the ratio of funding going to Africa vs. Latin America was 1:4 (i.e. for every dollar start-ups in Africa raised, their Latin American counterparts were raising $4). This ratio went up to 1:8 in H1 2021. However, it currently stands at 1:1.4 in H1 2023, the lowest it’s been since at least 2020…
I hope you’ll forgive us, but we’re taking a little break now. In the words of the great philosophers (Daft Punk): We are human after all. We’ll be back in early September, and hope you won’t miss us too much! 😉 And don’t you worry, we’ll continue collecting data on deal activity on the continent (your discounted link to our database is here), because while we might be taking a hiatus, we know entrepreneurs and investors in Africa won’t. See ya! Max
Thanks for sharing Max