If us tech and VC sneeze, African tech companies
catch a cold and that could put the African startup
ecosystem in a uniquely bad spot. Here's why the
tightening global financial conditions and concerns about the banking system
stability could mean more private equity and venture capital firms
choosing to conserve their cash into their safe havens or
even their countries knock on effects of that could prove
worrisome for African founders, heavily dependent on American capital
investment into African startups saw a record$5.3 billion in
funds raised in 2022 with funds such as Sequoia capital
Tiger global and the failed crypto firm FX leading the
largest investments in recent years, the influx of capital
led to expand operations and new job opportunities across the
continent contributing to the overall GDP growth of some of
Africa's biggest nations. But the recent collapse of Silicon
Valley Bank piled on to what was already an increasingly
bleak picture for tech in the region. Chipper Cash
and Africa focused fintech recently told us this capital is
definitely dried up in multiple markets. You have to
be very efficient with capital use and con cash.
And you know, mass layoffs are happening as a
function of that. So um it's, it's a
time where I think everyone is tightening their belts in
some form. Naspers Africa's most valuable tech company wound
down operations of its V C fund earlier this year
. And JIA another tech giant has been struggling with
persistent Losses and job cuts. Africa's tech sector was
one of the few VC markets that sought net growth
funding last year, raising more than$1 billion 71
debt deals. But with less liquidity in the system
, with global players, analysts say founders may need
to look to more local players in the short run --> .