A record 20 start-ups closed down across Africa last year, and many more scaled back operations due to a general funding drought that impacted many countries on the continent, leaving a trail of job losses.
Last year, the amount of funding raised by start-ups on the continent declined by 31 per cent to about $4.5 billion, from the $6.5 billion raised in 2022, which significantly impacted cash flows for budding companies.
According to the African Venture Capital Association (AVCA), a number of start-ups, which had previously raised significant amounts of funding from investors, last year closed down after failing to raise follow-up funding rounds.
“This funding drought led several early-stage companies to either significantly downscale operations or shutter completely,” said AVCA in its latest Venture Capital Activity in Africa Report.
“Reasons for their ultimate death range from a lack of working capital after failing to raise follow-on funding rounds, difficulties establishing sufficient and sustainable market penetration, and allegations of corporate governance misconduct against founders.”
Source: theeastafrican.co.ke
