According to Abel Boreto, Novastar Ventures, there might be some sort of funding slowdown in scaling startups in Africa by venture capital firms this year:
“My 2023 prediction is that things will get worse before they get better — down rounds, layoffs, closures and bridge rounds will continue to increase in the African startup ecosystem,” he said.
Although the year is in its early stage of first quarter (Q1) but it appears that some research shows that investors are gradually pulling back. This implies that things might be difficult for new and existing startups to raise capital.
Looking At The Global Economic Slowdown
Current global economic slowdown is definitely one of the major factors to consider. According to Bruce Nsereko-Lule, a general partner at Seedstars Africa Ventures, recent tight money policies and inflation will pause fundraising activities for African startups:
“With the global economic slowdown trickling into 2023 due to inflationary pressures and tightening monetary policy, investors on the continent will maintain a judicious approach to investment and African startups will continue to find fundraising challenging.”
Based on these predictions and global economic pressures, 2023 might not be a friendly financial year for mostly young startups.
For existing ones with big deals funding record, the sad truth is layoffs is at the corner—this might be a large scale downsizing even—as well as businesses closing down.
By Elijah Christopher