December 3, 2023

A new report from Africa’s foremost digital economy consultancy, TechCabal Insights has revealed that acquisitions have become more frequent in Africa’s tech ecosystem, showing signs of a maturing market. According to the report, 2021 saw 32 acquisition deals on the continent.

At the end of third quarter of 2022, there were about 43 acquisition deals, signaling a consolidation trend.

After two years of continuous growth in VC investment, funding announcements have hit a plateau. Startups have resorted to cutting costs to extend their runway, and acquisition deals have become necessary for survival, particularly with startups operating in the same market. The number of acquisitions between startups operating in the same market increased from 31 per cent in second quarter to 52 per cent in third quarter 2022.

The State of Tech in Africa Report compiled by TechCabal Insights, also found that the average seed ticket size remained stable at $2.5 million in second quarter and $2.7 million in third quarter.

A new narrative has emerged in Africa in recent years, embodied by the exponential growth of funding for technology startups. Investment in African startups grew 18 times between 2015 and 2021 and twice faster than global rates between 2020 and 2021. However, beyond the funding stories, there are the quieter tales of exits. By the end of first half of 2022, African-focused private capital investors had already made 22 full exits, representing about a 29 per cent increase compared to the 15 exits made in 2021 first half.

Commenting on the ?ndings of the report, Head of TechCabal Insights, Olanrewaju Odunowo, said “When it comes to Africa’s evolving tech ecosystem, appropriate context and nuances must be taken into account. Data without context is imbalanced and misleading and can lead to the wrong outcomes. Beyond crunching the numbers, we have gathered robust insights drawn from primary interviews with leading industry experts. Our aim with this report is to present easy-to-digest insights and data points that anyone – from founders to investors will find valuable.

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