Venture funding is slowing down in the US, Asia and Latin America, and big venture capital firms are adjusting their strategies to focus on early-stage startups. While Africa seems to be weathering the decline, there are concerns that growth-stage startups may struggle to raise capital, leading to mergers and acquisitions or early-stage companies will be deluged with too much cash.
African startups are already seeing some of that refocused capital. Tiger Global and Softbank, some of the biggest investment firms globally, have directly led or participated in some of the biggest disclosed seed and pre-seed deals in Africa since January this year, including two seed deals above $10 million. So investors and ecosystem stakeholders are beginning to ask questions.
Stephen Deng, a partner at San Francisco-based venture capital firm DFS Lab believes that while the effect of a funding slowdown in Africa may take some time to show, ultimately African startups will need to adjust to the new venture funding reality, “Obviously the later-stage investors are going to contract their valuations and yet there will still be high valuations early on,” he tells TechCabal in a call. Deng however, says that how Sufficient Capital, a DFS Lab investment syndicate invests will not change. “Our thesis,” he tells TechCabal on a call earlier this week, “does not change during the more capital intensive times. And it’s because we continue to invest in businesses that are fit for the continent and do not require a very capital-rich environment to succeed.”
Abraham Augustine has more in Venture funding is slowing down globally. Should African startups be concerned?
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