Nigeria lost the top position in terms of startup funding in Africa to Kenya in 2023 as startups in the East African country attracted the largest amount of funding in the year, topping the table with about $800 million.
This is according to the analysis of the African startup funding in 2023 released by research outfit, ‘Africa: The Big Deal’.
The analysis of the ‘Big Four’ in Africa comprising Nigeria, Kenya, Egypt, and South Africa, shows that Nigeria slipped from the 1st position it had occupied in 2021 and 2022 to 4th position as startups in the country raised the least amount compared with the other three.
Describing the change in fortune for Nigerian startups in 2023 as dramatic, the research firm stated that Nigerian startups raised a total of $410 million, less than half of what they raised in 2022 and 2021.
Dramatic change
Highlighting the performance of the four leading startup countries in Africa for the past year, the research firm said:
- “Nigeria is the country where the most dramatic change happened in 2023. While the country still claimed the highest number of start-ups to raise $100k or more (146, 29% of the continent), the amount they raised was divided by 3 YoY (-67%) to reach $410m, compared to $1.2b in 2022, and $1.7b in 2021.
- “As a result, its share of Western African funding continued to drop to reach 68%, down from 85% in 2021, and 77% in 2022. This is the lowest regional share of any Big Four market since we started collecting the data in 2019.”
‘The Big Four’ scooped 87% in 2023
Nairametrics had reported earlier that startups across Africa raised a total of $2.9 billion in 2023 representing a 39% year-on-year decline in funding. Of this amount, ‘Africa: The Big Deal’ said the ‘Big Four’ attracted 87% of all the start-up funding in Africa, their largest share since 2019.
According to the report, Nigeria, Kenya, South Africa, and Egypt were home to 71% (357 out of 500) of the start-ups who raised $100k or more on the continent last year.
It added that Kenya attracted the most funding, 28% of the continent’s total.
- “While Kenya suffered a decline (-25% YoY), its share of Eastern Africa’s funding grew from 86% in 2022 to 91% in 2023. 93 start-ups raised $100k or more during the period (19% of Africa’s total).”
In Egypt, 48 startups were recorded to have raised $100k+ in 2023, and this came as the lowest number out of the Big Four.
- “But thanks to a YoY decline (-20%) more moderate than Kenya and most importantly Nigeria, it was enough for the country to claim the second spot. Egypt’s share of North African funding grew substantially from 72% in 2022 to 95% in 2023 (+23pp, by far the strongest progression), due both to the magnitude of MNT-Halan’s fundraising, and Algeria and Tunisia’s inability to repeat their strong 2022 performance,” the report stated.
The report further disclosed that South Africa’s share of regional funding remains the highest at 97%. The 70 start-ups who raised $100k or more in the country cumulated $600 million in funding, which is 21% of the continent’s total. South Africa was the only one of the Big
Four not to see its total funding shrink between 2022 and 2023 (+8% YoY).
