Faced with the “reluctance” of investors, African start-ups must tighten their belts

Edem Adjamagbo with disillusioned precision the stages of the fundraising he launched a year ago. The Togolese entrepreneur wishes to collect 2 million euros to ensure the growth of his “Fintech” (financial technology), SEMOA, present in five French -speaking African countries, where she equips banks in digital services. After 122 contacts, of which 89 remained unanswered, the company suffered 23 refusals and only one positive return. “It still lacks 1.6 million euros. If we cannot find them, we will grow less quickly and not be able to open in new countries ”indicates Mr. Adjamagbo.

Semoa, created in 2016, has been profitable for four years and already has around fifteen client banks. “There is a real reluctance of investors vis-à-vis French-speaking Africa. It is difficult to exist in front of the “Big Four” ”regrets Togolese, in reference to the key countries of African “tech”: Nigeria, South Africa, Egypt and Kenya. These four markets once again attracted 67 % of venture capital investments in 2024, according to the annual report of the partners Africa published on January 23.

But the shortage of funding affects all the young shoots on the continent. Last year, they raised $ 3.2 billion (3.07 billion euros), 7 % less than in 2023, which was already a terrible year With a fall of 46 % of investments. Even start-ups of English-speaking locomotives must deal with tighter budgets.

Partner prefers to underline the ” resilience “ Ecosystem: a frank tumble has been avoided despite a context of global slowdown in funding and strong turbulence for African economies (depreciation of currencies, high interest rate, persistence of inflation).

“There was a lot of breakage”

Nevertheless, the economic situation is tough for the “tech” scene on the continent. “Compared to 2022, half of the investors on the VC [capital-risque] have disappeared. Fundes take much more time, capital is more expensiverecognizes Tidjane Dème, co -manager of Parth Africa. There has been a lot of breakage in recent months. Companies had to drastically reduce the sail, restructure their debt. It’s hard, but it’s also a good educational exercise after the overall bubble of 2021-2022. »»

These two years had been particularly fast for start-ups on the continent. The fundraisers then progressed according to multiple faster than in any other region of the world. A frenzy linked to the potential of an unexplored market, but even more to the appetite of Western investors ready to venture out of their traditional areas to find better yields. “At the time, a ride could be completed in only fourteen days”recalls Ghanaian Bernard Ghatey, investment director of the Norrsken22 fund, devolved to African “tech”.

The rise in world interest rates, in the wake of inflation, sounded the end of recess. Many of the American and European funds fell back on their own markets. In the absence of available capital, certain companies welcomed as pioneers in their field had to put the key under the door. Among them, Kenyan Gro Intelligence, specialist in agricultural data analysis, forced to close at the end of May 2024 after failing to secure emergency funds. Same fate for Copia, another Kenyan company active in e-commerce, however long very well funded ($ 120 million raised between 2013 and 2023).

“The trajectory is still positive when you look in the longer term”reassures himself Bernard Ghartey, recalling that the amounts harvested still remain much higher today than ten years ago. “And the future is promising, as there are problems in Africa that technology can help solve”continues the investor, citing trade, logistics or health.

A sector is already unavoidable on a continent where the majority of the population is excluded from the banking system: that of digital finance. According to the newsletter Africa : The Big Deal, The African “Fintech” would have once again concentrated almost half (47 %) of the funds raised in 2024. At the end of the year, two of them even succeeded in completing new transactions Figures: Nigerian Moniepoint ($ 110 million in October) and South African Tymebank (250 million in December). What make them access to the very closed club of “unicorns”, these unlisted companies valued more than $ 1 billion.

Obstacle course

“It is a good thing for the credibility of the ecosystem to have such companies, growing and capable of raising very large tickets”Estime Max Cuvellier Giacomelli, Cofondeurane D ‘Africa : The Big Deal. But according to the analyst, as long as venture capital focuses on a handful of countries and sectors, “fintech” in mind, it will be difficult to “Go to scale”. “The questionhe sums up, is whether it is Africa that does not know how to attract investments or investors who do not know how to see opportunities. »» The continent represents 18 % of the population of the globe but barely captures 1 % of the funding devolved to start-ups around the world.

“Investors are afraid of what they do not know”Kidus Asfaw judge, founder of the Ethiopian start-up Kubik. Specializing in the recycling of plastic in building material, his company completed in April 2024 a first round of $ 5.2 million. An obstacle course which lasted two and a half years, relates this former Google and Unicef. “Many investors were enthusiastic about our concept, but they would have liked to be based elsewhere, in New York for examplehe explains. A large part of my work consisted in doing the marketing of our market. »»