As the global venture capital market slows, Africa is choosing its own course

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Although the African enterprise common capital stayed afloat in the first quarter, some investors and tech stakeholders believe there is still a good chance the continent will join the rest of the world in slowing down.

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Experts told TechCrunch that the latest announced deals came months before macroeconomic issues — high interest rates, war, inflation — hit the global venture capital landscape. This means that there is a backlog in what is being reported as the current state of venture capital across the African continent. Thus, as funding for startups in the US and Europe dwindles, everyone agrees that the economic downturn will soon begin to affect emerging markets – in particular, Africa.

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“The moment of truth will be the end of summer.” — Max Cuvelier, co-founder big deal, — told TechCrunch. “August [and] September in particular, because that’s when we saw the boom last year.”

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Last year, African startups received more than $1 billion in funding in those two months. Anything less than that contributes to a year-over-year decline, Cuvelier said.

Stephen Deng, co-founder and partner in DFS laboratoryadded to this by saying that the same investors who inflated the valuations of US companies in the later stages are also the same investors who label African companies.

“I don’t see why, in the African context, this trend doesn’t end up affecting the continent as well and that we will see a slowdown,” Dan told TechCrunch. “One of the best scenarios is that we still see an increase in funding, but not the same percentage growth year on year.”

“If these global funds go and do less, that also means more opportunities for local funds to participate in expansions or their pre-Series A.” Sherpa Ventures co-founder Aaron Fu

Large firms such as Tiger Global as well as SoftBank have already been defeated in developed markets. Likewise, big firms that have invested some of their money in African startups could slow down their investment on the continent, local investors told TechCrunch.

Financing figures show that the African ecosystem has already received an inflow of about $2.7 billion. in the first half of this year. That’s double what the continent had raised by this time last year. In 2021 Africa produced five unicorns while raising $5 billion in total venture capital funding from Flutterwave, Chipper Cash, OPay, Wave, and Andela.

In the first half of 2022, not a single unicorn has been created yet. It’s true that stakeholders may not notice this given that four unicorns were announced in the second half of 2021, but it would be naive to predict the same for the rest of the year; we are in a completely different market.

But some experts say there may not be a massive drop in Africa if large Africa-focused firms continue to cut checks.

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