Africa VC Funding 2021- Q3 2023

The VC Winter came a bit later to Africa because of its relatively smaller deal sizes attracting investment late into the 2022; but... brrrrr... 2023 data tells a story of a dramatic downturn. Historically, African VC deals have been 50%+ focused on lower growth stage deals. But in 2023, VC deals on the Mother Continent have focused more on later stage investments, backing incumbents in major tech sectors. As inflationary pressures and the US treasury interest rate hikes continued into the Summer of 2023, the world is starting to acutely feel the pinch of the higher cost of capital.

When we spoke to Investors for their insights, they explained that because most VCs across the world raise funds in US dollars, they need to hedge foreign currency risk by going and investing in markets where foreign currency is more stable. This leaves African economies (and many other emerging markets) particularly vulnerable, as their currencies weaken against the US dollar. Lucidity Insights research shows that much of the domestic African capital is having to do the same, whether they are HNWI angel investors or African funds.