Africa, against global trends, raised more VC dollars in 2022 than in 2021. But the unicorn list continued to stagnate
African technology scene was met with fanfare in 2021: venture capital investments in the region totaled between $4 billion and $5 billion and yielded five unicorns. In my piece about this advancement, I predicted that there would be more unicorns by 2022. Those predictions turned out to be far from the truth by the end of the year.
Data from market insight trackers British Bridges and The big deal revealing that funding from African startups exceeded $5 billion in 2022 (including undisclosed deals) – a slight percentage increase from figures reported in 2021, despite a global pullback in venture capital funding. And yet no unicorns showed up all year, compared to five in 2021.
That fact may seem insignificant, because private valuations ultimately don’t pass a real test until startups go public. However, producing no unicorns, despite raising more venture capital, suggests it may be too early to assume that African markets are mature enough to support billion-dollar private companies like their counterparts in the South: India, Southeast Asia and Latin America. America, appear consistently.
That said, 2022 was special. The global economic downturn and risk capital tightness meant that each region produced fewer billion-dollar companies than the previous year. Worldwide, 216 unicorns were beaten in 2022, per Tracxn, compared to 541 in the previous year. In India22 companies became unicorns last year, compared to 46 in 2021. While 18 companies in Latin America got their horns in 2021, that figure dropped to just eight last year.
Unlike Africa, these regions raised much less venture capital in 2022 than they did in 2021, so it makes sense that their number of unicorns fell. In India, for example, the number of unicorns fell by more than half VC activity down 33%. Latin America and Southeast Asia also witnessed a double-digit drop in venture capital funding last year compared to 2021, though the decline in unicorn numbers points to more damage.
So what happened in Africa in 2022 that made it so…weird?
