South African tech startups saw a decline in investment in 2022.<\/p>\n
According to the 2022 African Tech<\/span>Startups Funding <\/span>Report by Disrupt Africa<\/a>, S<\/span>outh Africa saw a year-on-year (YoY) decline in both the number of startups receiving funding and the total amount of funding received.<\/p>\n Despite South Africa’s struggles, 2022 was a landmark year for tech startups in Africa. Over 600 African tech startups raised a combined $3.3 billion throughout 2022, a YoY jump of 55.1%.\u00a0<\/span><\/p>\n The growth in investment is impressive when considering the global downturn in investments for the year, especially in riskier asset classes like venture capital.<\/p>\n However, South Africa had a challenging year, with 78 startups receiving financial backing (12.3% of Africa\u2019s funded ven<\/span>tures). Together the South African startups raised <\/span>$329.7 million (9.9% of Africa\u2019s total), representing a 2% YoY decline.\u00a0<\/span><\/p>\n South Africa fell to fourth in both measures, dropping below Nigeria, Egypt and Kenya.<\/p>\n Prior to 2022, the amount of funding in South Africa had been growing YoY, and 2022 marks the first time the country’s numbers did not increase.<\/p>\n Fintech remains the dominant sector in South Africa, despite its lead decreasing as other sectors gained YoY. Last year, there were 28 fintech that received investment (31.5%), raising a combined $132,582,000 (40.2%).\u00a0<\/span><\/p>\n The e-health and AI sectors both stood out, with 14 (15.7%) and eight (9%) ventures funded, respectively.\u00a0<\/span><\/p>\n E-commerce and retail-tech also had a good 2022, receiving $97.8 million (29.6%), while other investments were spread across the reaminig sectors<\/span>.<\/p>\n Despite the challenging year, the average ticket size in South Africa was up to over $4 million, speaking to a higher number of larger ticket sizes.\u00a0<\/span><\/p>\n Disrupt Africa said that 2022 was a disappointing year for South Africa, with it being overshadowed by the vibrancy and enthusiasm of Nigeria and Egypt.\u00a0<\/span><\/p>\n South Africa does not have its merits – a higher prevalence of <\/span>mid and later-stage funding – but could use some rekindled energy.\u00a0<\/span><\/p>\n 2023 expectations\u00a0<\/strong><\/p>\n Despite 2022 being a difficult year for South African tech startups, 2023 has started well.<\/p>\n Speaking on The Month in VC<\/a> podcast, Gabriella Mulligan and Tom Jackson examined how much money tech startups raised so far in 2023.<\/p>\n Car subscription company Planet42<\/a> raised $100 million in combined debt and equity funding.<\/p>\n Credit company Lulalend raised $35 million, gaming startup Carry1st got $27 million, and insurtech company Naked<\/a> got $17 million.<\/p>\n Online security company Sendmarc, order-to-delivery service Yebo Fresh, breakdown management response app Right Now Response, and prop-tech startup Flow also received millions of US dollars in funding.<\/p>\n This is positive news for the South African tech startup environment in 2023, especially with the major tech companies facing a challenging year.<\/p>\n Companies such as Elon Musk\u2019s Tesla and Twitter, retail giant Amazon and tech conglomerate Meta have all seen upwards of tens of thousands of employees being laid off work amid a faltering global economy and high levels of inflation.<\/p>\n South Africa has a 68%<\/a> chance of entering a recession this year, with retrenchment expected in many sectors, including tech.<\/p>\n As the Mail and Guardian<\/a> reported, industry experts expect tech jobs to be shed in 2023 amid rising interest rates, which have increased the cost of doing business.<\/p>\n