At least five African tech startups shuttered in H1 2023 🛑 📉
The article highlights a decline in venture capital (VC) funding in the African tech ecosystem during the first six months of the year, compared to the same period last year. VC funding has been significantly impacted by the economic downturn and the withdrawal of US investors, which has made it challenging for startups in Africa to secure funding. As a result, some startups have been forced to shut down, scale down operations, or pivot.
The article mentions several African startups that have closed operations. Lazerpay, a Nigerian crypto and web3 company, shut down after failing to raise additional funding. Paxful, a global Bitcoin marketplace with a strong presence in Africa, also closed shop due to staff exits and regulatory issues. Kenyan B2B e-commerce startup Zumi closed down after facing difficulties in securing funding. Nigerian logistics startup Hytch closed down after being unable to raise sufficient funds. E-commerce startup Wabi, backed by Coca-Cola, ceased operations in several African markets.
Additionally, the article highlights some startups that have scaled down operations or pivoted. Crypto startup Pillow exited Nigeria due to the regulatory climate, while Hover, the parent company of Stax, transitioned to an open-source community after failing to raise additional capital. Copia, a B2C e-commerce company, closed its operations in Uganda but decided to focus on its operations in Kenya. Nestcoin, a Nigeria-based Web3 and crypto-focused company, downsized its workforce after being impacted by the FTX crash and pivoted to build a digital finance platform called Onboard.
The article also discusses the outlook for funding in Africa, with the prediction that valuations will continue to fall as local funds become more prominent and offer lower valuations compared to global capital. The challenges of accessing alternative funding options, such as debt, are highlighted, including higher interest rates and currency devaluation affecting revenue.
Overall, the article sheds light on the funding challenges faced by African tech startups and the resulting closures, scaling down, and pivots in the ecosystem.
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