A report by TechCabal has shown that funding for African startups plummeted by over 45 per cent to $466 million in the first quarter of this year.
In the latest document, the organisation recognised the challenges and innovative responses from startups amid the unsavoury situation. Amid the downturn, logistics startups came top earners with $151 million in investments.
Despite experiencing downturn, Fintech remained the sector with the “most funding deals.”
The report noted: “In response to funding constraints, several startups have opted for strategic pivots to ensure viability. These pivots range from shifts in business models such as transitioning from fintech to edtech, to exploring asset-light approaches.
“One standout example is KIPPA, which successfully navigated a sector switch, highlighting the adaptability and resilience of African entrepreneurs. Amid the challenges, success stories emerge with mobility platform, Swvl and Neobank, TymeBank, achieving profitability for the first time. These milestones are attributed to diligent cost-cutting measures, divestments and a sharp strategic focus.
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“Additionally, e-commerce giant, Jumia records a notable reduction in operating losses, signaling positive strides toward sustainability.”
The report submitted that regulatory developments played a crucial role in shaping the tech ecosystem across Africa, stating: “Highlights include Egypt’s issuance of its first 5G licence and South Africa’s approval of 59 crypto company licences, indicating a conducive environment for digital innovation. The quarter also witnessed a flurry of acquisition activities, including Mastercard’s strategic investment of $200 million in MTN’s fintech arm.”
It provides valuable insights into the implications of such acquisitions and their impact on the African tech landscape. Through case studies from Kenya to South Africa, the document examined trends in digital lending and crypto operations, offering insights for entrepreneurs navigating the evolving tech landscape.
TechCabal stated that the report paints a nuanced picture of Africa’s tech ecosystem, showcasing both the challenges posed by dwindling funding, as well as the resilience and adaptability of startups in the face of adversity.
