African start-ups have attracted increased funding in the six months to 30 June this year and have seen foreign investors shift capital away from emerging economies and frontier economies, as inflation rises, It defied a difficult business environment plagued by a weakening currency and rising interest rates.
According to the latest report by the African Private Equity and Venture Capital Association (AVCA), 445 venture capital (VC) deals worth $3.52 billion compared to 259 deals worth Ksh 1.57 million over the same period. completed by 300 unique companies in 6 months. last year.
This represents a 72% and 124% increase in the number and value of VC deals during the period covered.
The remarkable growth in start-up funding bucking global trends this year has helped African governments cultivate vibrant and supportive ecosystems in recent years, enabling entrepreneurship and investment, according to the report. It is the result of a concerted effort to prosper.
These government efforts include the Zambian government’s attempt to transform the country into a regional startup hub and the “Singapore of Africa” and the Tanzanian government’s launch of Silicon Zanzibar 7, according to a report released last week. It is included. A commitment to creating an environment in which African start-ups can thrive, remain competitive and attract commercial capital.
According to a report titled AVCAs 2022 Venture Capital in Africa, “Africa’s venture ecosystem shows a bullish trend despite steep inflation and an unfavorable macroeconomic environment.”
“Although the headwinds and tailwinds of the final quarter of 2022 are yet to be seen, the upward trend in venture capital in Africa in the first half of 2022 confirmed this optimism for the industry earlier in the year.”
Kenya outperformed its East African peers in funding startups during the period, according to the report.
According to the report, EA attracted 22% (98 deals) of all VC deals, Kenya completed 54 deals worth $330 million, Uganda (10 deals worth $41 million) and Tanzania (6 transactions) followed.
Startups are young companies with business models that support innovation, and venture capital is the funds invested to support these businesses, and there is a considerable element of risk involved.
West Africa has the highest number of total VC deals on the continent (33%), followed by East Africa (22%), North Africa (20%), Southern Africa (14%) and multi-region (10%). did. Central Africa (1%).
Of the 42 multi-region VC deals that took place in the first half of this year, 16 (38%) were companies that sought geographic diversification through direct business expansion, and 15 (36%) leveraged mergers. was a company. Acquisitions to facilitate regional expansion, demonstrating the dynamism of the plan.
According to the report, Nigeria recorded 101 VC deals worth $285 million, followed by Egypt (63 deals worth $352 million) and Kenya (54 deals worth $330 million). deals), South Africa (50 deals worth $131 million) and Ghana. (21 deals at $133 million).