And, we’re back!…

When I wrapped up in late July before our well-deserved August intermission, it did feel like I was probably writing one of my last ‘Look over at Africa, there is still growth there!’ post for a while. And unfortunately the numbers are proving me right…

Let’s be clear: Q3 2021 was always going to be hard to top as it boasted 2 of the 3 strongest months ever on the continent in terms of funding raised: $683m in August, and $824m in September. Adding July’s honourable $309m, start-ups in Africa had raised over $1.8bn in Q3 2021, more than in the whole of 2020. This number was boosted by 5 ‘mega deals’ ($100m+) in the period, including the largest ever recorded: Opay’s $400m Series C in August.

In a much more challenging global context, Q3 2022 is painting a very different picture so far (July+August), owing partly to the fact that no mega deal has been announced since June. Start-ups in Africa have raised $247m and $228m in July and August respectively (through $100k+ deals). Though honourable, it represents a monthly -20% and -67% fall YoY respectively. In absolute numbers, it also shows a significant slowdown compared to H1 2022. Indeed, the average amount of funds raised by start-ups in Africa in the first half of the year had established itself at just over half a billion dollars month. Both July and August closed at less than half this amount. Even the slowest month in H1 (April, $437m) was still significantly more successful in terms of funding raised than July or August. With $475m raised in Q3 2022 to date (-52% if we compare to the same period in 2021), it is now extremely likely that this quarter will register the first YoY quarterly negative growth since fundraising started to really heat up on the continent.

It’s not all doom and gloom though: deal activity (-18% YoY for July+August) is holding up better than the amount raised is (-52% YoY), which highlights that what July and August really missed was the very big deals. And at the end of the day, 2022 so far (January-August) still compares really well to the same period in 2021: with +25% YoY in terms of number of $100k+ deals (608 vs. 486), and +55% in terms of amount raised ($3.6bn vs. $2.3bn), there is still room for optimism!