In 2023, the African tech ecosystem faced challenges marked by a notable decrease in capital raised, amounting to a total of $3.191 B in fundraising. As reported by Africa: The Big Deal, the year unfolded with a decline in fundraising across successive quarters. In Q1, $1.2B was raised, followed by a decrease to $877.8M in Q2 and a further dip to $492.7M in Q3, signifying a quarter-over-quarter drop.
Despite these challenges, a minor improvement was observed in Q4, with the ecosystem rebounding to raise $551.2M. The dynamics of capital inflow throughout the year underscore the resilience of the African tech ecosystem, and the modest recovery in the final quarter provides a glimpse of potential resurgence in fundraising activity.
Examining equity funding by country, South Africa secured the largest share, raising $549M. Following closely, Nigeria secured the second position with $469M, Egypt with $433M, and Kenya with a total raise of $335M.
The decrease in venture capital funding is not exclusive to Africa; it mirrors a global trend. According to Crunchbase, since January 2022—when monthly worldwide tech funding last exceeded $60B—the once-robust flow of venture capital has steadily declined. January 2023 witnessed a drop to just under $40B, a figure that appears relatively optimistic when compared to the reduced amount of $19.2B collected in November 2023.
In 2023, we celebrated our 6th anniversary as we continue to deploy from our second fund. This fund serves as a nexus for a community of leading investors; Angels, Operators, GPs, and LPs, each bringing specific subject matter expertise to support our founders in growing their businesses. Throughout the year, we expanded our family of founders and welcomed new team members. Also, we launched our SPV program, a crucial initiative aimed at providing support to our portfolio startups and finding other gems at the seed stage with their fundraising efforts, marking a significant step forward in our commitment to supporting early-stage ventures in Africa.
In parallel, we dedicated efforts to bolster our portfolio support and strengthen the bond within our founder and community network by hosting our first founders’ retreat and LP community events. Though 2023 was not without its challenges, we approach 2024 with optimism and believe that it will be a much better year. The lessons learned in 2023 will serve as an invaluable guide, propelling us forward as we continue to support and elevate the next generation of innovative founders and businesses.
MT in Numbers — 2023
- We came across 1000+ companies via applications, outreach, referrals, and partnerships. We saw companies notably across Fintech, SAAS, e-Commerce, Healthtech, etc.
- We invested in 12 companies. The MT portfolio has now grown to 67 companies.
- 34% of the companies we invested in 2023 are either led by female founders or co-founded by female entrepreneurs.
- We made follow-on investments into 2 of our portfolio startups.
- We made our first investment in Tanzania.
- 6 of our portfolio companies got into global accelerators.
- In 2023, MT portfolio companies raised over $35m in funding.
- We had a total of 4 in-person community events (New York, San Francisco, Capetown, and Lagos) and 5 virtual community events.
New investments
In 2023, we made a total of 12 investments across the continent.
- Tembo Plus; Founded by Victor Joseph and Rueben Mwatosya, Tembo Plus provides users with APIs, SDKs, and tools to help them embed bank accounts, wallets, and financial products across the continent.
- AyaData; Founded by Fredie Monk, Ama Larbi Saw, and Rocco Falconer, AyaData provides users with innovative solutions that cut across the entire AI value chain. From data acquisition, and annotation to providing bespoke AI solutions.
- FoodCourt; Founded by Henry Nneji, FoodCourt is Nigeria’s leading “ghost kitchen”, making meals more accessible by taking control of the entire value chain from technology to production, and delivery.
- Poynt (Zuberi); Founded by Julian Owusu and Nana Adomako, Poynt is a social commerce platform that allows Africans & people from diverse communities to buy & sell secondhand items via a marketplace and live-streaming showcases.
- Pika; Founded by Sadiq Edu, Aba Sagoe, and Arum Galadima, Pika is a retailer-focused e-commerce platform, for testing/launching new FMCG products.
- Shipbubble; Founded by Jordan Ajibola and Ayodeji Abon, Shipbubble allows for the automation of shipping processes and the creation of branded tracking interfaces.
- Foodlama; Founded by Damilare Ogunleye and Santiago Schmitt, FoodLama uses advanced algorithms to tailor food recommendations to users' unique preferences and goals.
- Zilla; Founded by Tolu Abiodun and, Chibuike Maduekwe, Zilla provides buy-now-pay-later services to Africans.
- Mira; Founded by Ted Oladele and Olaseike Ibojo, Mira provides the fastest way for diners to order and pay for food.
- Oval; Founded by Chris Mozie and Paul Akubo, Oval provides the most comprehensive gateway to alternative financial services for fintechs and institutions across Africa.
- Baki; Founded by Kwehnui Tawah, Baki provides Black women in Africa with a world-class beauty retail experience that is inclusive, empowering, culturally relevant, and of the highest quality.
- Intron Health; Founded by Tobi Olatunji and Kunle Asekun, Intron Health is Africa’s first speech-powered medical record. It provides real-time clinical speech-to-text for over 200 African accents.
MT Overall Stats
We invested in 12 companies in 2023, a 40% decrease from the previous year. These investments span diverse sectors, including Fintech, Foodtech, Health Tech, etc. With a total of 67 companies across two funds, it brings the total number of founders to 140.
In total, 28 of our portfolio companies have gotten into global accelerators with a few getting into multiple accelerators. 11 in YC, 9 in Google, 7 in Techstars, 2 in 500 Global, 2 in ODx, 2 in Norrsken Impact Accelerator, 1 in Visa Fintech Accelerator. 80% of our portfolio companies have successfully raised funding post-Microtraction (including some of the investments made in 2022). Across 2 funds, our portfolio companies combined have raised a total of $135m+ (up from $100m+ in 2022) and are currently valued at $813M+ (up from $694m+ in 2022)
Currently, we have a presence in 8 African countries. We have made investments in Nigeria, Kenya, Ghana, Rwanda, Ivory Coast, Morocco, Tanzania and Uganda.
Portfolio Companies in the News
- Famasi closed a $300k pre-seed round to build pharmacy infrastructure in Africa.
- Pade closed a $500k pre-seed round to solve the problem of employee engagement in Africa.
- Treepz launched operations in Kenya.
- Lemonade Finance rebranded to LemFi
- Treepz pivoted to a car-sharing model
- Raise received funding from Carta
- Pade launched v.3 of their app
- Pennee and Oval got into Techstars NYC and Techstars Toronto respectively
- Orda Africa and Evolve Credit were selected for the Google for Africa Black Founders’ Fund.
- LemFi raised $33M Series A for global expansion in a round led by Left Lane Capital.
- Raise launched a new product called Calculator, for scenario modelling for African startups.
- Vesti launched Element by Vesti to bank US-bound founders.
- Chaka was acquired by Risevest for an undisclosed amount
- Honeycoin now enables USDC cashout at MoneyGram locations in Kenya, Uganda, Tanzania, Nigeria, Ghana, and the UK, expanding the real-world applications of Circle’s USDC on Stellar.
Community Events
- Microtraction events in SF and NY: We hosted some of our community members and friends of the fund in San Francisco and New York. The theme for both events was; “Understanding the African VC Opportunity” (Perspectives and Macro Themes from Microtraction: Africa’s pre-eminent early stage fund). We hosted over 50 guests across the two cities, interacting and sharing insights into Microtraction’s thesis in the African venture space. Some of those in attendance were Tunde Folawiyo, Chrysa Chin, Charlemagne, Michael Siebel, Ann Fraizer, Matt Margolin, and Joakim Noah. A big thank you to everyone who attended including our investors and founders (Olu from Vesti, Emmanuella from Pennee) who made it to either event. Thanks to The Flip Africa, you can watch the full event in San Francisco here and New York, here.
- Microtraction Founders Retreat in Lagos, Nigeria: On the 8th and 9th of December, 2023, we hosted founders of our portfolio companies at our inaugural Microtraction Founders Retreat. During the retreat, speakers shared insights and explored the nuanced workings of operating a startup in Africa under topics like Culture and Hiring, BD and Partnerships, Founders' Mental Health, Growth, Fundraising, and Corporate Governance. Founders had the opportunity to interact directly with experts to get bespoke insights tailored for their respective startups. Some of the speakers in attendance were Lexi Novitske, Tayo Oviosu, Eloho Omame, Adia Sowho, and Nichole Yembra.
Conclusion
At Microtraction, just like with all our portfolio companies, we are constantly evolving. We hold a firm belief that there's always room for improvement, and our relentless pursuit of excellence drives us to strive for more continually. Our aspiration is not just to be good but to be the best, consistently pushing boundaries and raising our bar.
Very importantly, we wouldn't be what we are today without the incredible founders we've had the privilege to support. We're constantly in awe of their vision and passion, and we eagerly anticipate the remarkable things they are building.
Equally crucial to our journey is the unwavering support we've received from our Limited Partners (LPs), advisors, network partners, the community, ecosystem stakeholders, and our dedicated team members. Their collective contributions have played a pivotal role in shaping Microtraction, and we are immensely grateful for the collaborative effort that has brought us to where we are today.
From all of us at Microtraction, we wish you a Healthy, Prosperous, and Happy 2024!
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