Can African startup funding hit $7 billion in 2022?

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October 17, 2022
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2 min read
Some coins and notes

Since 2019, venture capital funding to African startups has been on the rise. With the coronavirus pandemic slowing venture capital activity globally, Africa wasn’t left out, with startups on the continent raising $1.3 billion in 2020, way below most predictions. 

2021 was a record-breaking year for African startups, and depending on who you ask, African startups raised between $4.5 billion and $5 billion.

At the start of 2022, predictions were rife that African startups would exceed the $5 billion mark, and things appeared to be going smoothly. But while man proposes, the global economy disposes. While there were warning signs that venture capital activities had slowed down from February, by the end of Q1 2022, it was glaring. 

African startups, however, seemed to be immune to the challenges their global counterparts faced, raising $1 billion in the first seven weeks of the year and $2.25 billion by the end of Q1. All this while venture capital investments in other continents recorded negative YoY growth. 

By Q2, the signs were more visible. African startups had raised $3.1 billion as the first half of the year ended. But simply looking at the numbers was not enough to tell a complete story. Indeed, as Africa: The Big Deal reported, June 2022, Q2 2022, and H1 2022 were the strongest the ecosystem had recorded. Regardless, one would have noticed that funding fell in Q2 2022.  

The African Private Equity and Venture Capital Association (AVCA) is, however, optimistic about Africa’s chances of eclipsing the $4.5 billion raised in 2021. According to a recently released report, the firm expects funding to African startups to reach $7 billion by the end of the year.

However, this will depend on H2 maintaining the same growth rate as H1. The report also adds that the historic concentration of deals towards the end of the year could ensure that H2 equals but more likely exceeds H1’s numbers.

As this article pointed out, African startups raised $3.1 billion in H1 2022. If deal activities continue at the rate we saw, African startups could raise $6.2 billion, more than the continent received in 2021. 

Sadly, it has not and deals slowed down in Q3, with startups raising $247 million and $228 million in July and August, respectively. September did not fare better, with startups raising over $134 million. While not all funding was disclosed, they are unlikely to top the amounts raised in the preceding months. So far in October, $66 million has been raised in what could be a continuation of the trend.

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So, will African startups raise $7 billion in 2022? Not likely. But with a couple of mega deals,  the story could change. Even if startups fail to reach those numbers, they would at least exceed the approximately $5 billion raised in 2021, which is still an impressive feat.                    


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Accidental writer, covering Africa's startup landscape and its heroes. Find me on Twitter @chigo_nwokoma.
Accidental writer, covering Africa's startup landscape and its heroes. Find me on Twitter @chigo_nwokoma.
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Accidental writer, covering Africa's startup landscape and its heroes. Find me on Twitter @chigo_nwokoma.

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