African startups experienced a surge in venture capital funding in 2021, defying global trends. However, maintaining this momentum in 2022 has proven challenging.
While the first half of the year saw a record-breaking inflow of capital, exceeding $3 billion, the pace has significantly slowed in recent months. Factors such as the global economic slowdown, rising inflation, and increasing interest rates have impacted investor sentiment, leading to a decline in deal activity.
Despite these headwinds, the African Private Equity and Venture Capital Association (AVCA) remains optimistic, projecting that funding for African startups could reach $7 billion by the end of the year. However, achieving this ambitious target will require a significant uptick in investment activity in the remaining months.
While a few mega-deals could still propel the ecosystem towards this goal, it is increasingly unlikely that African startups will reach the $7 billion mark in 2022. Nevertheless, even if the final figures fall short of this projection, 2022 is poised to be another landmark year for African tech, surpassing the record-breaking funding levels achieved in 2021.
