Amidst a global decline in venture capital funding, the African tech ecosystem is grappling with a harsh reality as the “startup graveyard” expands. Global VC funding nearly halved in the first half of 2023, signaling a lack of investor enthusiasm exacerbated by rising interest rates. In Africa, Disrupt Africa’s figures reveal a staggering 48% drop in funding for tech startups in Q3, setting the stage for a challenging year.
Here’s a glimpse into the struggle, featuring 10 prominent startups that succumbed to the funding winter:
- Sendy (Kenya): Fulfillment startup closed in August due to reduced order volumes and soaring fuel prices.
- 54gene: Genomics research company with three CEOs in 12 months winds down operations after raising $45 million.
- Dash (Ghana): Payments startup with an $86 million war chest folds in October amid financial impropriety allegations.
- WhereIsMyTransport (South Africa): Mobility startup with $27 million in backing shuts down after failing to secure additional investment.
- Lazerpay (Nigeria): Crypto and web3 company closes in April after failing to raise funds, following layoffs in the previous year.
- Zumi (Kenya): B2B e-commerce startup shuts down in March despite $20 million in sales and 5,000 customers.
- Zazuu (London): Marketplace for African remittance companies closes citing a lack of funding, despite raising over $2 million.
- Hytch (Nigeria): Logistics startup shuts down in February after just nine months, unable to secure further funding.
- Okada Books (Nigeria): Digital publishing pioneer closes last month, citing insurmountable challenges in the macroeconomic environment.
- Pivo: Banking services startup closes doors amid founder conflict, despite raising a $2 million seed round in 2022.
Battling On Despite the Storm:
While many high-growth ventures adapt to the changing landscape, some are persisting against the odds:
- Copia (Kenya): E-commerce company shifts strategy, pulling out of Uganda to prioritize profitability.
- MarketForce (Kenya): Retail-tech startup faces challenges, turns to crowdfunding after certain VCs back out of committed funds.
- Twiga Foods (Kenya): Platform connecting farmers to vendors secures undisclosed funding amid a debt collection lawsuit.
- Paystack (Nigeria): Acquired by Stripe in 2020, the payments company scales back operations outside Africa to prioritize local presence.
The journey continues for those navigating the funding winter, reshaping strategies to weather the storm and emerge stronger.
Source: Disrupt Africa