Expanding African Blockchain Financing Landscape: More Arrangements, Less Capital Invested
In a recent report published by Swiss-based VC firm CV VC and South African bank Absa, it has been revealed that African blockchain startups are finding it harder to secure venture capital compared to two years ago. The African Blockchain Report 2024, a yearly update on the state of venture funding around the world with a focus on Africa, highlights a sharp decline in total blockchain funding despite an increase in the number of deals.
According to the report, African blockchain startups received $122.5 million worth of venture capital funding in 2024, a 36% decline from the previous year. Despite this drop, the number of deals increased by 15%, indicating more deals are being made, but their low value suggests that African blockchain founders continue to struggle to raise significant venture capital.
One of the key reasons for this funding crunch is the shift towards smaller ticket sizes and cautious capital. Startups are attracting more but smaller investments, reflecting investor caution amid ongoing global market volatility and a turbulent funding climate. This suggests that investors are making earlier-stage bets with less capital per deal rather than committing large sums.
Another factor contributing to the difficulty in securing venture capital is the concentration of investments. Funding remains concentrated in a few countries, namely Kenya, Morocco, Nigeria, Seychelles, and South Africa, limiting broader access across the continent.
Sector-specific challenges also play a role in the funding difficulties faced by African blockchain startups. While exchanges and decentralized finance platforms receive a healthy share of funds, sectors such as blockchain infrastructure networks have received little to no funding, signaling a gap in higher-risk but foundational technologies.
Global and local market volatility, regulatory uncertainty, and sector-specific challenges are not unique to African blockchain startups. However, they are particularly challenging for startups on the continent, as they are seen to solve real-world local problems.
The report does not provide a forecast for future investment trends in African blockchain startups. It does not specify the exact number of funded African blockchain startups or the total investment volume. Furthermore, the report does not mention any specific African countries where the funding difficulties are most pronounced or indicate whether the funding difficulties are unique to blockchain startups or affect other types of startups as well.
Despite these challenges, the report suggests a slow recovery of investment volumes for African blockchain startups from previous highs. Nigerian firms got funded across the most deals (10), but Seychelles maintained the top spot in terms of value received ($38.9 million across 8 deals).
In conclusion, the funding environment has shifted from fewer, larger deals to more numerous, smaller investments, reflecting more cautious investor confidence and a maturing but still developing market landscape for African blockchain startups. The report underscores the need for continued support and investment in African blockchain startups to ensure their growth and success in the global market.
- The African Blockchain Report 2024 indicates a decline in total blockchain funding for African startups, with a 36% drop from the previous year, despite an increase in the number of deals.
- One of the key reasons for this funding crunch is the shift towards smaller ticket sizes and cautious capital, as startups are attracting more but smaller investments.
- Another factor contributing to the difficulty in securing venture capital is the concentration of investments, with funding remaining focused on a few countries such as Kenya, Morocco, Nigeria, Seychelles, and South Africa.
- Sector-specific challenges also play a role in the funding difficulties faced by African blockchain startups, with sectors like blockchain infrastructure networks receiving little to no funding, indicating a gap in higher-risk but foundational technologies.
