A Magnet Foundation report has shown that the funds raised by startups in Africa during the first quarter (1Q) of this year declined significantly compared to the same period last year.

According to the report, startups in Africa raised about $561m during the first three months of this year, compared to $1.3bn for the same period last year.

According to the report, the decline in financing for emerging companies began since the second quarter of last year, as financing declined from $1.3bn in the first quarter of 2022 to reach $783m in the second quarter of the same year, then decreased to $456m in the third quarter, to conclude the year with a slight increase, as it achieved $460m in the last quarter of 2022.

The report said that the deals in the first quarter of this year amounted to about 113 deals, making it the lowest quarter of deals since the second quarter of 2020 and the lowest financing quarter in terms of deals since the first quarter of 2021.

Data from the first quarter indicates that the trend of slowdown, which affected the continent during the latter part of 2022, and if the huge financing deal for the Egyptian company Halan, which amounted to about $260m, is neutralized, then the volume of funding for startups in Africa becomes 5% lower compared to the the last quarter of last year.

At the country level, despite notable changes in trends during the first quarter of the year, the ‘Big Four’ remained the dominant players in Africa’s deals and finances.

According to the report, South Africa overtook Nigeria and Kenya to become the second most funded region on the continent. Egypt, with the support of the Halan deal, maintained its position as the best funded geographic region.

Halan Company managed to conclude a deal with Chimera at a value of $260m, in exchange for 20% of the company, which is a company for lending services in Egypt for non-banks, established in 2018, and the company’s headquarters is located in Cairo.

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