African startups faced a 39% decline in funding, raising $2.9 billion in 2023 compared to $4.8 billion in 2022, as reported by ‘Africa: The Big Deal.’

Despite the decrease, the result was better than anticipated in light of the global VC slowdown. The report highlighted that 500 startups secured at least $100,000, down from 821 in 2022, with the average deal size remaining stable.

Notably, the research platform revealed a shift towards debt financing among African startups, reaching $1.1 billion, a 47% YoY increase, while equity funding fell by 57%. In 2023, startups raised 65 cents of debt for every $1 of equity, constituting 38% of all funding, compared to 16% in 2022.

Briter Bridges noted that this trend had been evolving, with African startups borrowing $2.1 billion between 2014 and 2023, driven by a decline in equity funding over the last five years.

The rise of debt financing in Africa’s startup ecosystem is evident, growing from 4% to 26% from 2019 to H1 2023, according to Briter Bridges.

The report emphasized that the significant fall in equity funding, from $2.6 billion in 2022 to $1.4 billion in 2023, played a pivotal role in this shift.

Over the past decade, more than $2 billion in disclosed debt funding has been raised by digital, technology-enabled, and green companies in Africa, involving over 140 funders and 200 deals, according to Briter Bridges.

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