East Africa Com and tech news portal Connecting Africa found that despite constant investment, East African startups may still face obstacles.
According to research by regional tech event East Africa Com and tech news portal Connecting Africa, impediments may still stand in the way of the region’s growth trajectory, even though investment levels in East African start-ups have stayed consistent over the past year.
Threats cited by respondents in the poll titled “A Deep Look into East Africa’s Start-up Ecosystem: Challenges & Opportunities” include a lack of access to investors (59%) dependency on foreign venture capitalists (56%), and global recession tendencies (55%).
28% stated the covid outbreak had slowed investment in East African startups. 74% of respondents needed to meet five investors before receiving money, and 54% of seed enterprises rely on family and friends.
25.9% of participants were scale-up businesses, 20.4% were seed businesses, 28.7% were series A businesses, and 25% were series B businesses.
25% of respondents reported that investment levels had not changed year over year from the prior year. While 19% of respondents reported a minor decline in investment levels, the same number also indicated a slight increase.
While respondents listed covid as one of the primary factors reducing investment levels across the board, 17% said the pandemic accelerated the region’s progress toward digitalization. Some have even said that it may have opened up additional prospects for tech start-ups generally.
Opportunities and difficulties
Although the region has tremendous tech potential, considerable obstacles must be removed if it is to remain competitive.
After a few years of commercial instability, East African start-ups seem aware of global events’ potential impacts. Hence, 55% of participants consider a global recession and national economic situations dangers. Moreover, 32% of respondents said this was a very high barrier.
A high risk for business growth is also identified by 56% of respondents in the reliance on foreign VCs. This statistic is especially intriguing given that East Africa Com performed the survey just before the SVB issue materialized.
According to the SVB revelation, more people would view a lack of investors as a barrier to launching a firm, up from 59%.
East African startups have identified new development opportunities despite the bad news.
The survey found that East African digital start-ups have good growth prospects due to the increase of incubator networks (57%), funding industries (56%), local venture capitalists and funding options (55%), and funding pools.
The report also notes that 74% of respondents believe sustainability to be extremely crucial to their corporate objective.
Monitoring the thriving tech startup industry in East Africa
East Africa Com’s head of events, Ciara McDonald Heffernan, said they are proud to present these survey results, which help them keep the pulse on East Africa’s vibrant tech start-up scene to better assess how our programme and networking experiences can help promising tech businesses access funding, be agile and resilient, and remain innovative and competitive.
East Africa Com will organize a digital startup day in April 2023. ‘AHUB East’ will discuss the region’s tech start-up ecosystem’s role in Africa’s sustainable future, the SVB crash’s impact on start-ups, and how to stand out to investors.