Techcabal Insights has said funding for African startups dipped by over 45 per cent to $466 million in the first quarter of this year.
In its latest quarterly report, the organisation, however, acknowledged significant challenges and innovative responses from startups amid the disturbing situation.
Despite the downturn, logistics startups emerged top earners, securing $151 million in investments.
Notably, fintech, although experiencing a decrease, remained the sector with the “most funding deals.”
The document read: “In response to funding constraints, several startups have opted for strategic pivots to ensure viability. These pivots range from shifts in business models, such as transitioning from fintech to edtech, to exploring asset-light approaches.
“One standout example is KIPPA, which successfully navigated a sector switch, highlighting the adaptability and resilience of African entrepreneurs.”
Amid the challenges, success stories emerge with mobility platform, Swvl and neobank, TymeBank, achieving profitability for the first time. These milestones are attributed to diligent cost-cutting measures, divestments and a sharp strategic focus.
“Additionally, e-commerce giant, Jumia, records a notable reduction in operating losses, signalling positive strides toward sustainability.”
The report submitted that regulatory developments played a crucial role in shaping the tech ecosystem across Africa, stating: “Highlights include Egypt’s issuance of its first 5G licence and South Africa’s approval of 59 crypto company licences, indicating a conducive environment for digital innovation. The quarter also witnessed a flurry of acquisition activities, including Mastercard’s strategic investment of $200 million in MTN’s fintech arm.”
It provides valuable insights into the implications of such acquisitions and their impact on the African tech landscape.
Through case studies from Kenya to South Africa, the document examined trends in digital lending and crypto operations, offering insights for entrepreneurs navigating the evolving tech landscape.
TechCabal stated that the report paints a nuanced picture of Africa’s tech ecosystem, showcasing both the challenges posed by dwindling funding, as well as the resilience and adaptability of startups in the face of adversity.
