Foreign investments in Nigerian startups fell by 65.83 per cent year-on-year to $410m in 2023 from $1.2bn in 2022.
The fall in investments caused the country to lose its top spot in terms of total startup investments on the continent to Kenya.
In 2023, Kenyan startups raised a little under $800m to claim the top spot in Africa. Nigeria finished the year as number four losing out to Kenya, Egypt, and South Africa, according to an analysis of African startup funding of $100k and above in 2023 by a research firm, ‘Africa: The Big Deal’.
The Big Four continued their dominance in 2023, attracting 87 per cent of total startup funding on the continent, their largest share since 2019. Kenya, Egypt, South Africa, and Nigeria were home to 71 per cent (357 out of 500).
Commenting on this fall, the firm said, “Nigeria is the country where the most dramatic change happened in 2023. While the country still claimed the highest number of start-ups to raise $100k or more (146, 29 per cent of the continent), the amount they raised was divided by 3 YoY (-67 per cent) to reach $410m, compared to $1.2bn in 2022, and $1.7bn in 2021.
“As a result, its share of Western African funding continued to drop to reach 68 per cent, down from 85 per cent in 2021, and 77 per cent in 2022. This is the lowest regional share of any Big Four market since we started collecting the data in 2019.”
Despite suffering a decline (25 per cent year-on-year) Kenya was able to raise just under $800m in 2023, attracting the most funding, 28 per cent of the continent’s total. In Egypt, 48 such ventures raised $100k+ in 2023, the lowest number out of the Big Four. But because of Kenya and Nigeria overall decline, the country claimed the second spot on the continent raising $640m.
The firm said, “South Africa’s share of regional funding remains the highest at 97 per cent. The 70 start-ups who raised $100k or more in the country cumulated $600m in funding i.e. 21 per cent of the continent’s total. South Africa was the only one of the Big Four not to see its total funding shrink between 2022 and 2023 (+8 per cent y-o-y).” Overall, startup funding into Africa declined by 39 per cent to $2.9bn in 2023.
