The amount of venture capital flowing into Africa fell by 23% in 2023 for the first time in a decade. Total investment fell to $3.6 billion, and the number of deals fell to 603 from 854 a year ago. By the African Venture Capital Association (AVCA).
The report, obtained by Daily News Egypt, highlights that venture capital performance will be weak globally in 2023 due to continuous increases in interest rates and inflation rates. This downward trend started in early 2022 for him and continued thereafter.
Globally, venture investment fell to $285 billion in about 28,000 deals last year. This compares to $462 billion invested in 40,000 deals in 2022, an annual decline of 38.3%. In 2021, he invested $690 billion in 45,000 deals.
In 2023, North Africa accounted for 19% of total deal value, with 104 venture capital deals totaling $532 million. This drops her to fourth place among other regions, following her top spot in 2022.
The report also noted that Egypt was the fourth most active country in Africa in terms of venture capital activity, with 60 completed deals in 2023. However, this was a drop from the 2022 ranking of 2nd place.
Despite varying regional conditions, no region was spared the overall decline. North America accounted for 49% of the cuts from 2023 to 2022, amounting to $86.2 billion. Meanwhile, investment in Asia fell by $47 billion, accounting for 27% of the global investment decline. Europe contributed 19% of the economic downturn, with a drop in investment of $33.3 billion.
Seed funding continued to dominate in Africa last year, accounting for 37% of all deals. However, the number itself decreased from 355 transactions in 2022 to 199 transactions. Early-stage financings also fell, with 81 deals in 2023 compared to 131 the previous year. Late-stage funding declined significantly, with only 9 deals recorded compared to 16 in 2022.
Although there is a growing interest in large deals, they still represent only 1% to 2% of venture capital deals globally. Approximately 10 significant deals were completed in Africa and approximately 9 in the Middle East during the year. The Americas led the way with approximately 270 large transactions throughout the year.
Additionally, the report revealed that the main sectors that attracted investment last year were: The financial sector topped the list, securing 23% of total investment. This was closely followed by the information technology sector with 20%. The non-essential goods and services sector ranked third, accounting for 17%.
Investor interest in Africa is increasingly focused on sustainable development initiatives and projects aimed at mitigating the effects of climate change. Investments in these areas increased to $258 million in 2023 from $213 million the previous year. Furthermore, while interest in artificial intelligence has increased significantly in African markets, it still lags behind the attention in more technologically advanced economies.
The report also highlighted a positive trend, noting that funding for organizations led or founded by women has increased compared to the previous year. Despite this progress, significant disparities still exist. Male-led organizations received her 73% of investments, while female-led organizations were able to secure only 7%.
