A new report from Salient Advisory reveals that while equity investments dominated African healthtech funding in 2023, accounting for 91% of the total, grants played a critical role in supporting early-stage innovation.
Despite a significant funding dip across the broader African startup ecosystem, the healthtech sector demonstrated resilience, experiencing only a modest 2% year-on-year decline. This relative stability can be attributed to several factors, including a surge in large-scale funding rounds for a few prominent companies and the continued support provided by grant programs.
While equity funding enabled some healthtech startups to secure substantial investments, grants provided crucial risk-free capital, allowing innovators to test and validate their business models before seeking larger equity investments.
The Investing in Innovation program, supported by the Bill & Melinda Gates Foundation and other key partners, emerged as a significant contributor to the grant funding landscape, providing vital support to 60 early-stage healthtech startups.
Despite the dominance of equity, debt financing remained relatively limited in the healthtech sector in 2023. This can be attributed to the asset-light nature of many healthtech startups and the reluctance of lenders to invest in early-stage companies with unproven business models.
While Nigeria, Egypt, and Kenya continued to attract the lion’s share of healthtech funding, the sector witnessed a notable increase in funding for women-led healthtech startups.
Looking ahead, the healthtech sector is poised for continued growth, driven by the increasing demand for accessible and affordable healthcare solutions across the continent. Consolidation is also expected to play a significant role, with acquisitions becoming more common as companies seek to expand their market share and enhance their service offerings.
