2023 In Review

“One of the biggest mistakes investors make is to look at the last few years and assume that’s the new norm.”

— Francois Rochon

Going by all available reports, 2023 was a slow year in terms of funds raised by African startups and the number of African deals done. However, for a firm like ours that has been investing in this space for over a decade, we are able to have a longer time horizon for comparison. Hence, we realize that while 2023 paled in comparison to the three years before it, when you compare to pre-2019 data, it was not a bad year. 2023 actually signaled continuous growth and strengthening of the African ecosystem. It, thus, seems as if it was the years 2020-2023 that were exceptions to the norm and not the new norm as we all thought at that time. We all need to readjust our expectations accordingly.

“Rough seas make stronger sailors. Tough times build greater people.”

— Robin Sharma

Across our funds in 2023, we did make 11 great investments across six countries with 38% of our investments going to founding teams that had at least one female co-founder. This funding for women startup founders is well above the industry average.

Beyond fintech, we invested in industries such as agtech, deeptech and ecommerce, while also venturing beyond the Big 4 into markets such as Cameroon, Tunisia, and Burkina Faso. Our proactive approach in casting a wide net for the Fund has proven fruitful, allowing us to curate a portfolio of companies poised to disrupt their respective industries.

“The courage to press on…when the market storms howl around us – is the quintessential attribute of the successful investor”

— John C. Bogle

As we reflect on the past year, we are not only proud of our accomplishments but also excited about the promising landscape that lies ahead. With a forward-looking mindset, we anticipate a year of growth, innovation, and continued success in our goal of Funding Afropreneurs.

2024 Look Ahead

Traditionally, we refrain from making precise predictions about specific sectors or companies, focusing instead on outlining broader trends that shape our market and ecosystem. In a macroscopic view, we expect that the challenges that dominated much of 2023 will persist throughout most of 2024. These challenges include liquidity and currency devaluation issues across various markets, restricted funding for both companies and venture capital (VC) funds, and an intensified emphasis on positive economics, solid fundamentals, and effective governance.

Furthermore, we foresee a rise in ‘smart’ collaboration and potential mergers among startups. External pressures and the realization that working together is better than dying are leading reasonable founders towards a more cooperative mindset. Those who transition from only perceiving competition to embracing collaboration stand to gain a first-mover advantage in the evolving landscape. Additionally, as founders embrace a long-term, sustainable business-building mindset, collaboration becomes a strategic cornerstone.

Looking beyond startups, we anticipate a similar trend among investors who recognize the value of collective support in nurturing successful African startups. The emerging understanding that it takes a collective effort to foster a thriving African startup ecosystem is likely to result in increased collaboration among investors. In essence, we anticipate a shift towards a collaborative ecosystem where shared insights and support contribute to the success of the entire community.
It takes a village!!!

By Idris Ayodeji

February 2024

© 2023 LoftyInc Capital Management. All Rights Reserved.